Background on Telefónica and its Brazilian Operations
Telefónica, a Spanish telecommunications giant, has maintained its strong commitment to its Brazilian subsidiary, Telefónica Brasil. Despite recent speculation about potential divestments in Latin America, the company’s president for the South American region, Christian Gebara, emphasized that Brazil remains a crucial asset for Telefónica. The subsidiary accounts for 23% of the parent company’s total revenue, even amidst currency devaluation.
Telefónica Brasil’s Financial Performance
Telefónica Brasil recently reported its financial results for the second quarter and first half of 2021. The company achieved a net profit of 2,403 million reals (approximately 406 million USD), marking a 13.5% increase year-over-year. The company also generated revenues of 29,035 million reals, a 6.7% rise compared to the previous year.
- Q2 2021 net profit: 1,340 million reals (approximately 225 million USD), a 10% increase year-over-year.
- EBITDA for Q2 2021: 5,930 million reals, an 8.8% increase year-over-year.
Telefónica’s Latin American Divestments
In recent years, Telefónica has been divesting from several Latin American countries. The company sold its operations in Guatemala, Costa Rica, Colombia, and Uruguay. Additionally, Telefónica announced the sale of its subsidiaries in Argentina, Ecuador, and Peru. The company is reportedly in exclusive talks to sell its Mexican business to Beyond ONE, the owner of Virgin Mobile México, which could fetch around 609.28 million USD.
Impact on Other Telecom Players
In Argentina, Telecom is nearing completion of its acquisition of Telefónica, announced in February for 1.245 billion USD. In Colombia, Uruguay, and Ecuador, Millicom, a Luxembourg-based telecommunications operator founded in 1990, acquired Telefónica’s operations. In Peru, Integra Tec, an Argentine company, purchased Telefónica’s operations to secure its position in the 5G spectrum auction in the Andean market.
Key Questions and Answers
- Q: Why is Telefónica Brasil so important to the parent company? A: Telefónica Brasil contributes significantly to the group’s growth and cash generation, accounting for 23% of Telefónica’s total revenue.
- Q: What recent financial results did Telefónica Brasil report? A: The company reported a net profit of 2,403 million reals (approximately 406 million USD) for the first half of 2021, a 13.5% increase year-over-year. Revenues reached 29,035 million reals, a 6.7% rise compared to the previous year.
- Q: Which Latin American countries has Telefónica divested from? A: Telefónica has sold its operations in Guatemala, Costa Rica, Colombia, Uruguay, Argentina, Ecuador, and Peru.
- Q: What is the potential value of Telefónica’s Mexican business sale? A: The Mexican business could be sold for approximately 609.28 million USD to Beyond ONE, the owner of Virgin Mobile México.
