Telefonica’s Venezuelan investment ramped up

17 Apr 2013

Telefonica reportedly plans to increase spending in Venezuela in 2013 by 78% to VEF3.9 billion (USD619 million), excluding VEF600 million earmarked for mobile broadband spectrum licence fees, partly to hedge against a further decline in the value of cash which it cannot repatriate to Spain. Bloomberg reports that according to internal company documents dated this month, the group’s Movistar Venezuela unit accumulated dividends valued at USD3 billion over the past seven years, but the dividends have lost around USD1.4 billion in value, taking into account the February devaluation of the Venezuelan bolivar to VEF6.3 per USD1, from VEF4.3 per USD1.

Additionally, according to the report Movistar Venezuela predicts 2013 EBITDA of VEF9.54 billion, an increase of 22% from 2012, while sales are expected to climb 37% to VEF23.6 billion. Telefonica saw its earnings in 2012 hurt by a EUR417 million (USD546 million) loss from its position in bolivars. Other risks include slower economic growth, ‘strong inflation and bigger regulatory restrictions’ as well as availability and price of smartphones in the market. The division has a target of 4.2 million smartphone customers at the end of 2013, according to its internal presentation, while it counted 3.4 million such users at the end of the first quarter of 2013, 155,000 fewer than it had predicted, partly because of the currency devaluation, the documents showed. Movistar Venezuela is in second place in the market in terms of total subscribers, between state-backed Movilnet and locally-owned Digitel.

Venezuela, Movistar Venezuela, Telefonica