Telefonica set to kick off German IPO, report says

1 Oct 2012

Spanish telecoms group Telefonica will reportedly kick start the initial public offering (IPO) of its German unit this week with a pitch to investors based on the strength of the local mobile market, Reuters reported on Friday, citing three people familiar with the matter. Telefonica, which is struggling to cut its debt burden amid falling revenue and profit in its domestic market, is aiming to raise as much as EUR1.5 billion (USD1.8 billion) from the sale of a potential 20% stake in Telefonica Germany (O2), according to reports. The first official document on the IPO is expected this week, to be followed by management roadshows and marketing to investors. The company could begin taking orders for the shares in late October or early November, the report adds. To attract investors to the IPO, Telefonica will also offer a dividend, the three people said.

Telefonica had earlier explored the possibility of a merger of its local unit with E-Plus, the German mobile business of the Netherlands’ KPN Telecom, which at the time was fending off an unsolicited offer by Mexico-based America Movil (AM). However, in June 2012 KPN announced it had failed to find a buyer for E-Plus, citing ‘adverse conditions in financial markets’ as the reason behind the collapse of talks, and shortly after AM succeeded in its bid to increase its stake in the Dutch telco to 28%.

Germany, Telefonica, Telefonica Deutschland Holding