The Spanish capital company Telefónica Hispanoamérica has decided to sell 64% of its fiber optic business in Peru to the US investment fund Kohlberg Kravis Roberts (KKR) and Entel, through Pangeacoa network launched in 2020 with the aim of expanding the highest-speed fixed internet service in all regions of the country.
All as part of a plan initiated by Telefónica in the third quarter of 2021, just over a year after the creation of Pangeaco, in an attempt to moderate its presence in the region and bend efforts to guarantee the “profitability, efficiency and extraction of more value of our assets”.
José María Álvarez-Pallete himself, executive president of Telefónica, had anticipated changes in the company’s stock policy, dragged down by “geopolitical, macroeconomic and regulatory uncertainties” in some countries where it operates. With the partial sale of Pangeaco, the company also cuts its existing net debt by about €200 million -which in March exceeded 26,000 million euros-, according to a notification from the National Securities Market Commission (CNMV) of that country.
Telephone denies departure
From Telefónica del Perú they have ruled out that this new 54% divestment movement in favor of KKR implies an exit from the national market. Instead, it mentions that it will double the number of homes and businesses to which it will provide high-speed fiber optic internet service, through the new company that will be formed On Net Fiber of Peru. With this, it hopes that between now and 2026 it will reach about 5.2 million households with the possibility of contracting fiber optics to the home.
However, the decision comes six months after the Supreme Court ruled against him for the payment of almost S/3,000 million to the Peruvian State, the largest fine in its history, in a tax dispute from 2000 and 2001.
César Romero, Head of Research at Rent4 SAT, warns that the firm requires about 3.7 years to meet its long-term payments, while it can cover the parent company’s total investments for 3.6 years. This does not reveal problems on the horizon regarding solvency or liquidity, since it covers all payments to 2025.
“The Hispanic American market in which they no longer seek to grow still responds positively, which will allow them to settle with good returns and improve financial metrics, deleveraging the company”said.
Meanwhile, the lawyer specializing in digital law Erick Iriarte believes that Pangeaco’s actions have been sold for much more than their value cash, although the amount of the transaction is not known. This shows that “they are having access to fresh money that they have valued, but that they are not going to stop using.”
“Organizations need to be careful where they put their Capex (capital expenditures). It is part of an exercise at the Hispanic American level to have fresh money while facing legal obligations in Peru to continue growing ”, she refers.
This is how the income of Telefónica del Peru goes
The revenues of Telefónica del Perú in 2022 amounted to S/7,156 milliona growth of 1.5% compared to 2021.
In 2021, Telefónica Hispanoamérica also closed the sales of the 60% of its fiber businesses in Chile and Colombiawhich allowed it to reduce its debt at that time by around $712 million.
According to Renta4 SAB, the restructuring of the business has reduced the representation of its Hispanic American EBITDA from 20% to 11% of the total in the last year.
By country, the worst performing market within this sector for the first quarter was Peru. Due to the social situation and competition, its EBITDA fell 3.3%, due to the rains on the northern and central coasts.
Entel will enter Pangeaco with 10%. Telefónica del Perú, with its new CEO Elena Maestre, will have the other 36%.
Source: Larepublica
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