Tech

Latin America: Telefónica focuses on Germany and Europe

Telefónica has announcedto expand and possibly sell their networks in Latin America, except for Brazil, into a new company. CEO José María Álvarez-Pallete said the Financial TimesThe change is due to the conviction that time has come for the "traditional formula" in telecom has expired – the sale of smartphones and contracts to millions of customers. The company plans to focus on Spain, the UK, Germany and Brazil, where it has several times tried to sell the O2 networks, which account for about 76 percent of its sales.

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Europe's fourth largest telecommunications company, with more than 300 million customers, is struggling for solid earnings growth. The stock, which reached its lowest level in more than two decades in 2019, lost 9 percent this year. The company's gross debt stood at 57 billion euros at the end of September.

Telefónica had spent more than $ 100 billion on expansion in Latin America, but the business accounted for only a quarter of the Spanish group's sales. Nevertheless, in 2004, the company acquired Bellsouth's South American operations, worth $ 9.5 billion, outperforming Mexican billionaire Carlos Slim. The Latin American business should account for more than half of Telefónica's total sales.

The sale is already underway: Telefónica sold networks in Guatemala and El Salvador to Slims America Movil and Millicom in Panama, Costa Rica and Nicaragua this year. The remaining companies, which cover large markets such as Chile, Mexico, Argentina and Colombia, are valued at around 11 billion euros, but could reach up to 14 billion euros according to analysts.

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