Telefónica seeks to acquire the 28% of German arm it doesn’t already own

Spanish operator group Telefónica has offered to buy every last share in Telefónica Deutschland that it doesn’t already own.

That amounts to 28.19% of the shares, for which it is offering a premium of around 37% on the current share price. Obviously, Telefónica is hoping that will be a sufficient inducement for them to cash in but, for that to be the case, they would have to conclude there is little hope of the company organically growing its value by more than that in the foreseeable future. So, in effect, Telefónica is saying this is their best chance of a positive return, which is a bit awkward.

“The Offer reinforces Telefónica’s strategy to focus on its core geographies (Spain, Brazil, Germany and the UK) and its strong commitment to the German market, representing one of the most attractive and stable telecom markets in Europe,” says the accompanying press release. “The Offer also supports Telefónica’s efforts to simplify the group’s structure.”

Those efforts are likely to be clarified later this week, when Telefónica is expected to announce its new strategic cunning plan for the next few years. It offered a few teasers during its Q2 earnings announcement over the summer. “Focused on the customer and the creation of shareholder value, and with technology as a decisive factor to better understand and connect with the world, Telefónica is preparing its 2023-2026 plan with a model of operational excellence based on three pillars: growth, profitability and sustainability,” said CEO José María Álvarez-Pallete at the time.

An interesting twist on all this is that Telefónica is trying to fully own one of its subsidiaries at a time when Saudi operator group STC is taking a 10% stake in the whole group. This move alarmed the Spanish state to such an extent that it recently said it may buy a chunk of its own just to secure Spanish ownership of this ‘strategic company’. So long as telcos continue to be the focus for venture capital, increased political interest in their ownership seems guaranteed.

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