Telefonica’s shares rose by 1.8% after selling its Argentinian unit to Telecom Argentina for $1.245 billion, which far exceeds market expectations and analysts’ valuations. The deal raises potential for synergies in the telecom sector while facing possible regulatory hurdles.
Shares of Spanish telecommunications firm Telefonica (TEF) saw an increase of about 1.8% following the announcement of its sale of the Argentinian unit to Telecom Argentina for $1.245 billion. This deal has surpassed analyst expectations, with Banco Sabadell noting that the valuation is more than double their forecast of €490 million (approximately $512.93 million).
Renta 4 Banco highlighted that the sale price exceeds market predictions, which were around €1 billion, and their own estimate of €825 million. They also expressed anticipation for further divestments in Latin America, particularly in countries like Colombia, Peru, Mexico, and Uruguay.
J.P. Morgan pointed out that the acquisition could create significant synergies and potentially stabilize the Argentine telecommunications market, which would be essentially reduced to two major players: Telecom and America Movil (AMX/B). However, uncertainty remains about whether additional regulatory approvals will be necessary, with some government opposition potentially leading to restrictions or deal rejection.
In summary, Telefonica’s sale of its Argentinian unit for $1.245 billion marks a significant achievement exceeding market expectations. Analysts view this as a positive move, although concerns regarding regulatory approval from the Argentine government could impact the deal’s completion. Overall, the transaction highlights Telefonica’s strategic shifts in the Latin American market, with potential for further divestments and operational efficiencies.
Original Source: www.tradingview.com
