Telefonica, facing roadblocks in the planned sales of its assets following Britain’s vote to leave the European Union, is paring a stake in China Unicom (Hong Kong) to raise as much as $367 million.
The sale of 361.8 million shares began and the stock is being offered at HK$7.75 to HK$7.85 apiece, according to terms of the deal seen by Bloomberg News. The deal has demand for all the stock on offer, said people familiar with the matter, who asked not to be named while the transaction is underway.
Telefonica risks having its credit rating cut if the carrier doesn’t come up with a clear way to reduce debt by year end, Moody’s Corporation analyst Carlos Winzer said last month. Telefonica shelved plans to sell a stake in its UK wireless carrier O2 amid market volatility following the country’s referendum. The firm also delayed a listing of its Spanish infrastructure unit Telxius, people familiar with the matter had said.
Bank of America Corporation is managing the sale of shares in a rare weekend deal. A spokesman for Telefonica declined to comment.
Since the referendum, Telefonica has declined 7.9 per cent, underperforming the Stoxx 600 Telecommunications Index of European companies. Telefonica needs to raise about 14 billion euros ($15.5 billion) to achieve its target of a ratio for reported net debt to earnings before interest, taxes, depreciation and amortization of 2.35, according to Winzer.
Meanwhile, Telefonica Brasil, the country’s largest telecom operator, sees revenue from digital services growing faster than overall sales as the company moves away from a model based on offering voice and internet connection.
The Brazilian unit of Spain’s Telefonica says revenue from digital services including video streaming and cloud storage already represented 1.9 billion reais ($569.24 million) in 2015, or about 5 per cent of net revenue.
That reflects rapid growth for a segment that “started from scratch” less than three years ago, according to Ricardo Sanfelice, the division’s recently appointed vice president.
If trends continue, voice revenue should continue shrinking as a share of revenue from around half currently to about a quarter of sales in five years, Sanfelice told Reuters in a telephone interview.
Digital services at Telefonica Brasil grew 15 per cent last year, he said, outpacing overall revenue growth of 5 per cent. Although he declined to give firm forecasts, Sanfelice said “there is no reason” for digital services not to keep expanding at the same pace.
The UK will fall into a “short, shallow recession” around the turn of the year as brexit hits house prices, jobs and spending, according to the EY Item Club.
In a report to be published on Monday, the forecaster will say it’s slashing its 2017 growth estimate to 0.4 per cent from 2.6 per cent and predicting the Bank of England will cut interest rates to zero by the end of 2016. Tax reductions are also a possibility, it will say, as the government scales back austerity to aid an economy reeling from the shock vote to pull Britain out of the European Union.
“There are likely to be severe confidence effects on spending, only partially cushioned by a fall in the pound,” the report will say. “We would expect a permanent reduction in the level of UK output and productivity.”
Source: http://gulftoday.ae/portal/be8a479f-9775-4dad-a512-1ee6586a3e16.aspx