Less than a month after the Spanish government replaced the group CEO, there’s activity on many fronts in South America
In 2019, Jose Maria Alvarez-Pallete laid out his strategy “for a new era”. A major plank of that strategy was to exit LatAm, apart from Brazil, and focus on Brazil and the group’s other three key markets – Germany, Spain and the UK.
Five years later, it seems that Telefonica Group’s former CEO and Chair acting fast enough for some in the Spanish government. Less than a month after Alvarez-Pallete was ousted in a boardroom coup, Marc Murta, the political appointee who replaced him, is reportedly taking action on several fronts. Perhaps this sheds some light on why the government stuck its oar in, sending shockwaves through the industry.
Mexican exit?
Most recently, the Spanish newspaper Cinco Dias has reported that Telefonica Group has employed JP Morgan to sell its Mexican business, citing anonymous sources. Allegedly, the company wants to make the sale before its annual shareholders meeting, which is usually held in April or May, the newspaper said.
Leaving Argentina
Previous to that announcement at the end of last week, Forbes Argentina (and others) reported that Telefónica Group is believed to have “reactivated” the sale of its Argentian subsidiary and attracted interest from several “national businessmen” who could compete to own it.
There is speculation that an official announcement will be made on 27 February when Murta presents Telefonica group’s result for 2024.
Forbes lists potential buyers
Forbes says the potential buyers are Grupo Werthein, a conglomerate with businesses in media technology, entertainment, health, agriculture, food and beverages, property and tech. In 2024, it agreed to acquire 100% of the capital of Vrio from AT&T. Vrio provides live and on-demand content via DirectTV Latin America, SKY Brasil and DirectTV GO. which at the time had 10.3 million subscribers in 11 countries in Latin America and the Caribbean.
Olmos Group has branched out from its healthcare origins into media with acquisitions including Crónica TV, Bae Negocios and other websites and radio stations.
Clarin Group is Telefónica Argentina’s biggest rival and is likely to be ruled out to protect competition in the sector.
The Mexican billionaire and telecom entrepreneur, Carlos Slim controls América Móvil which operates under the Claro brand in Argentina. In 2019, América Móvila cquired Telefónica’s operations in Guatemala and El Salvador for $648 million.
‘Outside’ interests
There is also potentially considerable interest from further afield, including France’s Iliad Group controlled by billionaire Xavier Niel Through various investment vehicles, he owns a 29% stake in Millicom and has tried to gain control of the group for some time. Millicom has opcos in Bolivia, Colombia, Panama, El Salvador, Guatemala, Costa Rica, Nicaragua and Paraguay.
Telefonica announced it is looking to sell a majority stake in its Colombian unit last July to Millicom.
Also, US’ Liberty Global, which in partnership with Telefónica, owns the UK’s Virgin Media O2 and could be interested in the Argentinian market, Forbes reckons.
Peru files for insolvency
Telefonica Peru began an insolvency process last Friday to restructure its finances and operations having failed to find a buyer, according to Bloomberg. The filing will reduce the exposure of the wider group to the fallout.
Telefonica has set aside almost €800 million for taxes in Peru. The decision for the Peruvian opco to file for insolvency coincides with the start of arbitration hearings that the opco filed four years ago to challenge tax bills in a dispute whose roots stretch back more than 20 years. In addition to the tax dispute, Bloomberg says Telefonica Peru “faces deteriorating prospects” in a difficult market.
Bid to reassure?
Meanwhile, Cinco Dias also reports that Telefónica is taking good care of minority shareholders of Telefonica Brazil of which it owns 76.3%. It handed out about €900 million to shareholders in 2024, an increase of more than 22% on the 2023 amount.