According to media report the struggling telecom giant,
) is considering the sale or merger of its Irish subsidiary, O2
Ireland and has received several offers. The divesture is part of
the company's attempt to reduce its enormous debt burden.
To revive its financial health, Telefonica has been disposing
off its non-core assets for quite some time now. The Spanish
giant could obtain as much as $907 million (€700 million) from
the sale of O2 Ireland, which is one of its non-core assets.
The second-largest mobile network in Ireland has received
expression of interest from several companies including
Hutchinson Whampoa Limited, which already owns the 'Three' mobile
business in the country. However, Hong Kong-based Hutchinson
could face regulatory hurdles as acquiring O2 Ireland will create
a monopolistic situation within the Irish market.
Telefonica has one of the highest debt burdens within the
industry and had an outstanding debt of approximately $68.43
billion at the end of the first quarter of 2013.Telefonica wants
to reduce its debt by approximately $6.4 billion (€5 billion) by
the end of 2013.
Recently, Telefonica reported mixed financial results in the
first quarter of 2013, where the company's earnings beat the
Zacks Consensus Estimate, while the top line failed to beat the
same. Within Europe, macroeconomic crisis and intense competition
from the likes of
) Orange mobile brand and
Vodafone Group Plc.
) is affecting Telefonica.
The telecom behemoth has stopped paying dividends and is
planning a widespread restructuring to considerably reduce its
leverage in an attempt to weather the difficult situation. The
company raised $1.93 billion (€1.45 billion) by listing its
German unit, Telefonica Deutschland, and has also sold its small
China Unicom Limited
) for $1.47 billion (€1.13 billion).
Recently, the Madrid-based company sold a 40% stake in its
Central American operations for $500 million (€ 389 million) and
is also considering the sale of its Czech Republic operations. We
believe that offloading its non-core assets will not only fulfil
plans to reduce its mounting debt burden but will also boost its
bottom line in the coming years.
Currently, Telefonica carries a Zacks Rank #3 (Hold).
CHINA UNICOM (CHU): Free Stock Analysis
FRANCE TELE-ADR (FTE): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
VODAFONE GP PLC (VOD): Free Stock Analysis
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