Telefónica's assets gain attractiveness despite a decrease in real value

At the end of January 2025, it was reported that Telefónica appointed JP Morgan Bank to analyze offers for its subsidiary in Argentina. At the same time, Telefónica del Perú admitted that it had held conversations with potential bidders for its business and stated that no significant progress had been made. Although Telefónica began its exit from Latam in 2019, it did so by divesting non-strategic assets. Since then, its main operating variables have gone down and the value of its assets are on the floor. In 2019 Telefónica decided to exit Latam with the exception of Brazil. The decision was framed in a deterioration of local economies and, mainly, in Telefónica's intention to improve its global debt profile. In the five years prior to that decision, the Hispanomerica (Hispam) region's revenues had already been diluted by 29.2%, measured in Euro, and its contribution to the Group had been 21%; 9 points less than in 2014. At the same time, the technological change that the migration to fiber optics and 5G would entail, and the investment and cost of this change, was already in sight. Telefónica grouped its assets within the Hispam unit and immediately began the dismemberment. The package included Argentina, Chile, Colombia, and Peru, four operators that were incumbents, plus Mexico, Ecuador, Uruguay, Venezuela, and five Central American markets. The whole was valued at between 3 and 4 times its EBITDA, which was equivalent to between EUR 8 billion and EUR 10 billion. In 2019 it sold its holdings in Central America, three countries for USD 1.43 billion, but then the pandemic hit. It was only able to sell its other two units in Central America in 2021 for USD 695 million. Creativity is imposed by necessity.  Stranded in Latam, Telefónica undertook a process of “network efficiency” that broke with the old axiom of the regional industry that indicates that a telco operator -especially a large one- must have its own network. Telefónica applied different nuances of that premise. In Chile, Colombia, and Peru it spun off the fiber network unit and allied with strategic partners to accelerate deployment and then become a customer of that infrastructure. In Argentina, it maintained its network, of limited extension, and chose to partner with local players with deployments in complementary geographies: American Tower, Metrote,l and Sion. In all cases, it maintained the principle of exchanging CAPEX for OPEX. It also divested its tower unit, Telxius, for USD 900 million. In Mexico, it returned the radio spectrum -because it was recorded with high exploitation rates- and started to operate on AT&T Mexico's spectrum resource. In 2023, in Colombia, Telefónica created a joint venture with Millicom for the 5G spectrum bidding and subsequent...