• Telefónica has been rationalising its Latin American portfolio for a while
• Its latest divestment is its operation in Peru, which has been struggling
• The move fits in with the vision of the new CEO, who regards Brazil as the only valuable market in the region

In line with its ongoing “asset portfolio management policy” and the long-term vision of its new executive chairman Marc Murtra, Telefónica has agreed the sale of yet another business unit in Latin America (LatAm), this time in Peru.

Telefónica has been offloading Latin American units at an increasing pace over the past year or so, having sold its business in Colombia to Millicom in July last year and reaching a deal to sell its operations in Argentina to Telecom Argentina for $1.245bn in February this year. In addition, the telco has reportedly hired JP Morgan to sell Movistar Mexico, the country’s second-biggest operator, with about 26 million customers. 

Now, having initiated a bankruptcy restructuring process in order to reorganise its assets in Peru, where intense competition, tax contingencies and “administrative decisions” have hammered its operations, Telefónica has agreed to sell Telefónica del Perú to Integra Tec International – an Argentine company with experience in turning around struggling Latin American companies in the telecom, utilities, media and other sectors – for just €900,000. However, Integra Tec will assume the €1.24bn the company owes in tax and bondholder payments. 

Integra Tec will have its work cut out to turn around Telefónica del Perú, which has 13 million customers, making it the second-largest player in the region behind América Móvil’s Claro, but shrinking revenues and earnings. In 2024, the operator generated sales of €1.47bn, down 7.4% from the previous year, and EBITDA of €135m, down a whopping 56.1% compared with 2023’s results. The new owner says its key objectives are to “maintain and expand service, restructure the company’s debt within the framework of the [ongoing bankruptcy proceedings], and establish a sustainable business plan with a solid capital structure”.     

For Telefónica, the move takes it one step further towards a portfolio that is focused on major markets with growth potential, and for the giant Spanish telco it doesn’t see a great deal of value in Latin America. The operations in Colombia, Argentina, Mexico and Peru are all part of the telco’s Telefónica Hispanoamérica division, which is no longer regarded as strategic, as Telefónica has been aiming to “gradually reduce exposure to Hispanoamérica” for the past few years. The remaining operations in that division are in Chile, Ecuador, Peru, Uruguay and Venezuela.

That Hispanoamérica divestment plan now looks certain to be accelerated under Murtra, who was named as Telefónica’s new executive chairman in January when dominant shareholders effectively ousted the former chief José María Álvarez-Pallete: Murta’s appointment was ratified by shareholders during the company’s Annual General Shareholders’ Meeting on 9 April. 

As we previously reported, Murta is undertaking a major review of the company to implement a new strategy that revolves around cementing Telefónica as a European powerhouse. “Our priority will be Europe, Europe and Europe; we will maintain our leadership position in Brazil as a core market and we will focus on what we know how to do as an industrial operator,” Murta told the shareholders’ meeting – see New Telefónica CEO preps massive overhaul.

The Brazil operation, which trades under the brand Vivo, is not part of Telefónica Hispanoamérica – it is a standalone business unit in the telco’s portfolio, is financially stable and is growing its customer base, which includes more than 102 million mobile and almost 7.3 million fixed broadband customers.

With Murta now at the helm, the market can expect more M&A news soon from the Hispanoamérica division.     

- Ray Le Maistre, Editorial Director, TelecomTV