Telefonica suspends share trading

26 March 2013 | Mitch Sayers

Trading in Telefónica’s shares was suspended this morning after the operator said it would sell all of its treasury stock in an effort to reduce debt.

In a statement made Spain’s telecoms regulatory authority, the suspension was lifted, at 0900 GMT this morning. Telefónica declined to comment.

The carrier is aiming to cut debt to less than €47 billion by the end of 2013 and the sale of treasury stock - which is equivalent to 2% of the company’s capital - will not take more than a day, a Telefonica spokesperson said on Monday.

"Assuming a 5% discount versus yesterday's closing price... the company could raise €962 million, representing 22.4% of Telefonica's total debt-reduction target in 2013," Banco Sabadell, the financial services provider, said in an investors note.

The 90.1 million treasures shares are being offered at €10.8 to €11 each which is a 3.9% discount from yesterday’s trading.

The debt-cutting target is part of a scheme to reduce company debts from €51 billion at the end of 2012.

A Madrid-based analyst, Borja Mijangos, told Bloomberg: “The transaction will allow the company to substantially reduce debt. Still, the company will need to continue reducing its leverage.”