Telefonica CFO Sees `Attractive' Possibility in Mexican IPO

  • Spanish carrier has sought to boost market share in Mexico
  • Mexican business is among carrier's best-performing units

Telefonica SA may consider an initial public offering of its Mexican unit in a move that could let Spain’s largest phone company raise funds for the business while keeping control.

“It’s a business that could potentially be attractive for an IPO," Chief Financial Officer Angel Vila said Wednesday at a Morgan Stanley investor conference in Barcelona. “It’s a very good opportunity. After sitting in the country for so many years, now that it is making money, it would be strange" to have an outright sale of the unit, Vila said.

Angel Vila
Angel Vila
Source: Telefonica SA

Telefonica has sought to bolster its presence in Mexico to catch up with America Movil SAB. It attempted to buy Grupo Iusacell SA, a competitor which ended up being acquired this year by AT&T Inc. Telefonica has said recently that the Mexican unit is among its best performing businesses under certain metrics, even as it continues to seek to expand its services and market share and improve its network.

An IPO could also be an option for Telefonica’s U.K. business O2 if the Spanish carrier fails to seal the sale of the unit to Hutchison Whampoa Ltd., Vila said. The O2 sale, announced this year, is facing regulatory scrutiny and hasn’t been approved yet. While Telefonica is confident the deal will be completed in the second quarter of 2016, there are other options if needed, Vila said.

“We know there are third parties interested in the assets, we can do capital markets," Vila said.

Telefonica’s shares fell 0.6 percent at 9:04 a.m. Thursday in Madrid to 12.11 euros.

In Brazil, the carrier would be supportive of a merger between Tim Participacoes SA and Oi SA, Vila said. A merger of two of the “weaker” players in South American country would bolster the market and also mean that assets would be put up for sale as the companies seek to meet regulatory demands, Vila said. The potential merger of Oi and Tim, which is controlled by Telecom Italia SpA, has gained momentum in recent weeks after Russian billionaire Mikhail Fridman agreed to inject $4 billion into Oi on condition that its merges with Tim.

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