Few details were known so far about the Latin American business holding company interested in being a “half-way” partner of Telefónica's Latin American businesses. The offer itself - according to El Mundo estimates - must also be defined and the specialists of the Colombian firm Cremades & Calvo Sotelo would be involved, hired for the task by the buyer; and on the other hand, Morgan Stanley who is at the service of Telefónica to look for partners or buyers of HispAm. 

From Telefónica they officially indicated to Convergencialatina that no comments are being made on the alleged offer. Sources close to the operator, meanwhile, shuffled, among other possibilities, that the version only aimed to assess the impact of an operation such as the one reported in the destination of Telefónica. Above all, in the confidence of potential investors in the new direction set by the Board of Directors at the hands of José María Álvarez-Pallete (and in the four markets that interest him: Germany, Brazil, United Kingdom and Spain, of course). 

After all, when the HispAm spin-off was revealed last November, Telefónica came from months of fall in the value of its shares, with a real crash in August 2019 that led to € 6,345 per share, the lowest level recorded in more than two decades. The accumulated last year accounts for a 10% decrease in the value of Telefónica's securities in the Ibex (the fourth most pronounced decline among publicly traded companies), and indeed, prior to the publication of El Mundo It was around € 6.15. The company, which was worth € 100,000 million, currently reaches a market capitalization value of around € 30,000 million, to the point that it was recently exceeded in weight in the Ibex by the technology solutions company for the tourism industry Amadeus (€ 32,000 millions).

And that difference in value between these two companies, like the one that telco have with other companies in the new economy, leads us to think that it is complex to transform the telecommunication natives to compete in another generation of services demanded by consumers.  

The operator's efforts to sustain the price of the titles became evident in recent months due to the accumulation of shares by managers. Telefónica doubled its treasury stock since May 2019, up to 2.44% of the capital, with 50 operations: thus reaching 126.74 million shares, equivalent to 2,441% of the voting rights. 

With this panorama, the bullish reaction of the securities after the announcement of the holding of businessmen (closed the trading session on Tuesday Tuesday at € 6.32 per share after a rise of 2.72%) was recognized by market analysts as seen Good to Telefónica's restructuring plan. For the Catalan bank Sabadell, the offer is not surprising, and would mean a "catalyst" for a "very punished" action. "Although the valuation commented in the press would be aligned with our estimates, we believe that the route that would best monetize these divisions would be the sale by regions / assets to different operators since it would allow them to benefit from better valuations for the synergies that would be obtained particularly in each market, "analyzes the entity. Credit Suisse mentioned two inflection points for Telefónica in 2020: the growth of its EBITDA and the announcement of future asset sales.

The doubts raised by Telefónica's indebtedness - € 38,000 million, almost six times above the profits - could be cleared with a scheme like the one raised by the aforementioned offer of the holding company. The possibility of conserving participation in each Latin American subsidiary, which could be between 20% and 25% - according to the El Mundo version - or even 51% - as suggested by sources close to Convergencialatina-, would allow it to moderate the exposure to financial vulnerabilities in the region, recover lost confidence, and in turn, avoid disappearing from a territory that for years provided good news and income that contributed to its expansion. 

If Telefónica received capital equivalent to 50% of the value of HispAm (some analysts estimated it at € 12,000 million), the spin off would revive and be in a position to fight for the market in the countries it wants to negotiate. To do this, you will have to invest and, above all, aim at the businesses that will be opened by the new technological wave that promotes the era of the Knowledge Economy. Of course, in those Latin American countries, the evolution to what Álvarez-Pallete has been calling the Digital Revolution will be slow, but for the company it can be interesting and convenient to be in the foundational stage of that future course.