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Reports suggest the company is preparing to divest of its Chilean unit, while at the same time making plans to buy Liberty Global’s stake in the UK’s Virgin Media O2
Telefonica is taking the next step in its withdrawal from South American, appointing Citi to oversee the sale of its Chilean unit, according to a report from El Confidencial.
Estimates suggest that the unit could be worth up to €1 billion.
Telefonica has gradually been reducing its presence in Latin America since 2019, with the company saying it would instead focus on its key markets of Brazil, the UK, Spain, and Germany.
This transition has seen a notable acceleration this year, following the surprise ousting of longstanding executive chairman José María Álvarez-Pallete and his replacement by Indra’s Marc Murtra in January. So far in 2025, Telefonica has already agreed to divest of its operations in Argentina, Peru, and Colombia.
This week, Murta presented the company’s first quarterly results under his guidance, with these divestments contributing a significant financial hit to the companies bottom line. Telefonica booked a net loss of €1.3 billion in its Q1 financial reporting, €1.2 billion of which came from the discontinuation of the Argentinian and Peruvian units.
In Telefonica’s core markets, however, the company fared better, reporting a profit of €427 million.
“The results for the first quarter meet our expectations, while free cash flow reflects the usual seasonality. The Group’s results will improve throughout the year, in line with our forecasts for 2025,” said Telefonica COO Emilio Gayo in a related statement.
Speaking of the company’s core markets, reports suggest that Telefonica is considering taking full ownership of its Virgin Media O2 (VMO2), its UK joint venture with Liberty Global. Sources say that Murtra has held discussions with advisors on the plan, but no formal decision has yet been made.
Telefonica denies such discussions are underway, saying the company is “happy with the current situation”.
Buying out Liberty Global would be an expensive endeavour; VMO2 has recently been valued at £31.4 billion, with a problematic debt pile of £21.8 billion. Given that one of Murtra’s key focusses in Telefonica’s ongoing strategic review is to reduce the company’s own leverage – which currently stands at around €25.8 billion – such an acquisition would be challenging.
That said, there are options available. Under the original merger terms, the joint venture partners can seek an initial public offering three years after the deal’s close in 2021. Alternatively, they can also sell their stake directly to a third party once five years have passed – a deadline that would be reached next year.
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