Telefonica to raise spending budget once again following hints of further devaluation

7 Jun 2013

Telefonica Venezuela (Movistar) reportedly plans to raise its annual CAPEX spending budget for a second time as it aims to avoid a further decline in the value of cash which it cannot repatriate to Spain, following rumours that the Venezuelan bolivar could be devalued for a second time this year. Bloomberg quotes a person familiar with the matter – speaking on a confidential basis – as saying that the Spanish group will later this week approve an additional spending plan of VEF1.3 billion (USD207 million), following April’s approval of a 78% increase in its CAPEX budget to VEF3.9 billion excluding an additional VEF600 million earmarked for acquiring mobile broadband spectrum. Movistar Venezuela 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 2013 devaluation of the bolivar to VEF6.3 per USD1, from VEF4.3 per USD1. The latest move comes amid speculation of a further devaluation of the bolivar to VEF9.3 per USD1.

Venezuela, Movistar Venezuela, Telefonica