Telefonica SA is weighing the sale of a stake in its technology unit, people with knowledge of the matter said, ahead of a new strategic plan for the Spanish carrier.
(Bloomberg) — Telefonica SA is weighing the sale of a stake in its technology unit, people with knowledge of the matter said, ahead of a new strategic plan for the Spanish carrier.
The Madrid-based company has been meeting with investment funds to gauge their interest in acquiring a stake in Telefonica Tech, according to the people. Any deal could value the fast-growing unit at more than €2 billion ($2.10 billion), they said.
Deliberations are ongoing and there’s no certainty Telefonica will decide to proceed with a sale, the people said, asking not to be identified discussing confidential information. Although interest is in line with expectations, Telefonica is considering whether it should wait until the tech division has grown further before selling a stake, one of the people said. A representative for Telefonica declined to comment.
Telefonica Tech is mainly focused on helping large companies migrate and manage operations on cloud platforms such as Microsoft Corp.’s Azure and Amazon Web Services. It also provides services in cybesecurity and Internet of Things.
While still smaller than Telefonica’s legacy telecommunications business, the tech division has seen its revenue grow at a faster clip. Telefonica Tech sales jumped 36% year-on-year in the second quarter to €456 million, vastly outpacing revenue growth across the broader group.
Telefonica’s Chief Executive Officer Jose Maria Alvarez-Pallete is preparing to lay out a new three-year strategic plan in November, as part of the company’s first Capital Markets Day in more than a decade. The shares are down about 60% since Pallete became top executive in April 2016, compared with a 40% decline for the Stoxx 600 Telecommunications Index.
In September, Saudi Telecom Co. announced that it was acquiring a 9.9% in Telefonica. In its announcement, STC cited the Tech division as one of the reasons it was attracted to the Spanish carrier.
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