European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Telefónica is nearing completion of its Latin American divestment strategy, unlocking capital from low-margin markets and reducing geopolitical risk, with €2.5 billion equity value estimated for remaining Hispam units.</li>
<li>A conservative 4x EV/EBITDA multiple applied to Hispam subsidiaries yields a fair value of €5.06 per share, while a prudent €4.50 target reflects geopolitical and execution risk buffers.</li>
<li>Proceeds from disposals strengthen Telefónica’s balance sheet, support its 7% dividend yield, and enable reinvestment into high-growth segments like Tech and fibercos, enhancing long-term shareholder value and operating efficiency.</li>
</ul>


Telefónica is nearing completion of its Latin American divestment strategy, unlocking capital from low-margin markets and reducing geopolitical risk, with €2.5 billion equity value estimated for remaining Hispam units.
A conservative 4x EV/EBITDA multiple applied to Hispam subsidiaries yields a fair value of €5.06 per share, while a prudent €4.50 target reflects geopolitical and execution risk buffers.
Proceeds from disposals strengthen Telefónica’s balance sheet, support its 7% dividend yield, and enable reinvestment into high-growth segments like Tech and fibercos, enhancing long-term shareholder value and operating efficiency.


Telefónica: Execution and Valuation Update

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

Equity Bottom-Up

<ul><li>TSMC's expansion in US poses a challenge to Trump's labor strategy, according to DIGITIMES analyst.</li><li>Tesla leads in AI technology for electric vehicles and robots, pushing the boundaries of innovation.</li><li>European telecoms shift focus to AI as 5G deployment faces delays, while Indian mobile market shows growth potential in 2025.</li></ul>

TSMC's expansion in US poses a challenge to Trump's labor strategy, according to DIGITIMES analyst.Tesla leads in AI technology for electric vehicles and robots, pushing the boundaries of innovation.European telecoms shift focus to AI as 5G deployment faces delays, while Indian mobile market shows growth potential in 2025.

Tech Supply Chain Tracker (06-Mar-2025): TSMC's US expansion challenges Trump's labor tactics -DIGITIMES

<ul>
<li>Telefónica is actively pursuing asset sales in Latin America and Europe, aiming to streamline operations and reduce net debt. The company anticipates generating approximately €3.27 billion from these transactions.</li>
<li>Assuming minimal tax liabilities due to potential offsets from existing losses, the net proceeds could be applied directly to debt reduction, representing an 11.4% decrease in net debt (2.5x EBITDA).</li>
<li>Telefónica’s dividend remains well covered, with a dividend yield of 7.2% for 2025e, significantly above the 10-year Spanish bond yield (3.2%).</li>
</ul>


Telefónica is actively pursuing asset sales in Latin America and Europe, aiming to streamline operations and reduce net debt. The company anticipates generating approximately €3.27 billion from these transactions.
Assuming minimal tax liabilities due to potential offsets from existing losses, the net proceeds could be applied directly to debt reduction, representing an 11.4% decrease in net debt (2.5x EBITDA).
Telefónica’s dividend remains well covered, with a dividend yield of 7.2% for 2025e, significantly above the 10-year Spanish bond yield (3.2%).


Asset Sales as a Catalyst for Share Price Recovery

<ul>
<li>The Spanish government extended the anti-takeover shield to December 31, 2026, maintaining oversight of foreign direct investments in critical sectors like energy, defense, and technology to safeguard national interests.</li>
<li>Investor concerns include regulatory uncertainty, lack of clear criteria, and expanded obligations under the 2023 Foreign Investment Law, deterring foreign investments and delaying significant projects.</li>
<li>Balancing security and openness preserves free capital movement benefits, addressing vulnerabilities while avoiding protectionism that could harm competitiveness and strain relationships with foreign partners.</li>
</ul>


The Spanish government extended the anti-takeover shield to December 31, 2026, maintaining oversight of foreign direct investments in critical sectors like energy, defense, and technology to safeguard national interests.
Investor concerns include regulatory uncertainty, lack of clear criteria, and expanded obligations under the 2023 Foreign Investment Law, deterring foreign investments and delaying significant projects.
Balancing security and openness preserves free capital movement benefits, addressing vulnerabilities while avoiding protectionism that could harm competitiveness and strain relationships with foreign partners.


Extension of Spain's 'Anti-Takeover Shield' and Investor Concerns

<ul>
<li>Vivendi executed a landmark three-way spin-off in December 2024, <em>aiming</em> (but not succeeding) to eliminate its conglomerate discount and unlock shareholder value by listing Canal+, Havas, and Louis Hachette separately.</li>
<li>Following Telecom Italia's strategic unwinding, Vivendi incurred over €2 billion in losses but recovered nearly €1 billion in cash through divestments, highlighting its shift toward portfolio streamlining and deleveraging.</li>
<li>Vivendi now operates as a focused investment holding with UMG comprising over 60% of its asset base, but high concentration and equity beta expose the group to significant portfolio risk.</li>
</ul>


Vivendi executed a landmark three-way spin-off in December 2024, aiming (but not succeeding) to eliminate its conglomerate discount and unlock shareholder value by listing Canal+, Havas, and Louis Hachette separately.
Following Telecom Italia's strategic unwinding, Vivendi incurred over €2 billion in losses but recovered nearly €1 billion in cash through divestments, highlighting its shift toward portfolio streamlining and deleveraging.
Vivendi now operates as a focused investment holding with UMG comprising over 60% of its asset base, but high concentration and equity beta expose the group to significant portfolio risk.


Initiating Coverage Of "New" Vivendi, Latest Portfolio Disposals

Spain

Telefonica S.A. provides telecommunications services mainly to countries in Europe and Latin America.  The Company offers fixed-line and mobile telephone, Internet, and data transmission services to residential and corporate customers.

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Telefonica SA (TEF SM)

Telefónica: Execution and Valuation Update

Telefónica's Latin American divestment strategy nears completion, unlocking capital, reducing risk, and strengthening balance sheet for...

Jesus Rodriguez Aguilar

Tech Supply Chain Tracker (06-Mar-2025): TSMC's US expansion challenges Trump's labor tactics -DIGITIMES

TSMC's US expansion challenges Trump's labor strategy, Tesla advances AI in electric vehicles and robots, European telecoms focus on AI and discuss...

Tech Supply Chain Tracker

Extension of Spain's 'Anti-Takeover Shield' and Investor Concerns

Spanish Government extends anti-takeover shield to 2026, overseeing foreign investments in critical sectors to protect national interests.

Jesus Rodriguez Aguilar

Initiating Coverage Of "New" Vivendi, Latest Portfolio Disposals

Vivendi's three-way spin-off aimed to eliminate conglomerate discount, but incurred losses and shifted focus to portfolio streamlining with UMG as...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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Telefónica: Execution and Valuation Update

​Telefónica's Latin American divestment strategy nears completion, unlocking capital, reducing risk, and strengthening balance sheet for...

Jesus Rodriguez Aguilar

Tech Supply Chain Tracker (06-Mar-2025): TSMC's US expansion challenges Trump's labor tactics -DIGITIMES

TSMC's US expansion challenges Trump's labor strategy, Tesla advances AI in electric vehicles and robots, European telecoms focus on AI and discuss...

Tech Supply Chain Tracker

Asset Sales as a Catalyst for Share Price Recovery

​Telefónica plans to sell assets in Latin America and Europe to reduce debt by €3.27 billion, potentially lowering net debt by 11.4% and...

Jesus Rodriguez Aguilar

Extension of Spain's 'Anti-Takeover Shield' and Investor Concerns

​Spanish Government extends anti-takeover shield to 2026, overseeing foreign investments in critical sectors to protect national interests.

Jesus Rodriguez Aguilar

Initiating Coverage Of "New" Vivendi, Latest Portfolio Disposals

​Vivendi's three-way spin-off aimed to eliminate conglomerate discount, but incurred losses and shifted focus to portfolio streamlining with UMG as...

Jesus Rodriguez Aguilar

Telefónica's Latin American divestment strategy nears completion, unlocking capital, reducing risk, and strengthening balance sheet for...

Telefónica plans to sell assets in Latin America and Europe to reduce debt by €3.27 billion, potentially lowering net debt by 11.4% and...

Spanish Government extends anti-takeover shield to 2026, overseeing foreign investments in critical sectors to protect national interests.

Vivendi's three-way spin-off aimed to eliminate conglomerate discount, but incurred losses and shifted focus to portfolio streamlining with UMG as...