Telefónica plans IPO for its German unit

04 October 2012 | Kavit Majithia


Telefónica has confirmed plans to sell shares in its German unit in a bid to curb its growing debt.

The IPO is expected this quarter, and is tailored towards reducing the Spanish group’s debt burden, now standing at €58 billion.

A statement released by the operator yesterday did not confirm what percentage it plans to list, but Telefonica did confirm of plans to keep a majority stake in the subsidiary. Reports suggest the IPO could raise as much as €1.5 billion.

With increasing competition in its domestic market and falling profits, Telefónica has been seeking to sell parts of its non-core assets throughout 2012, including stakes in its German and Latin American units.

Telefónica Deutschland shares will trade on the Frankfurt stock exchange and the listing could happen this month. Bloomberg reports that Telefónica will begin looking for interested parties from this week.

The company added its German unit will pay approximately €500 million in cash dividends next year, from 2012 earnings, in a supposed bid to attract investors. Forecasts suggest the company expects its dividend will increase in the coming years.

Its German unit is presently the third largest service provider in Germany based on last year’s earnings, and competes behind Vodafone and Deutsche Telekom.

René Schuster, CEO of Telefónica Deutschland believes an IPO will help the business in the future. “We are convinced that an IPO will enable us to raise our profile further, and to continue our successful growth story of Telefónica Deutschland in Germany in the long term,” he said.

2013 is expected to see the launch of LTE services for the company in Germany.