Telefonica Awakens To Debt Concern With Unicom Stake Cut-Bloomberg - Tim Travis

Send Message

Tim Travis is a veteran deep value investor and money manager. Travis has extensive experience in traditional investments such as stocks and bonds, in addition to having a unique methodology of combining options and distressed investing with value investing to generate income, reduce risk, and... More

My company:: T&T Capital Management
My blog:: T&T Capital Management Blog
My book:: Learn to Treat Your Portfolio as a Business

Telefonica Awakens To Debt Concern With Unicom Stake Cut-Bloomberg 0 comments

Jun 11, 2012 10:33 AM | about stocks: TEF

Telefonica (TEF) announced that they are selling half their stake in China Unicom for $1.4 billion. They still own 5% in the company moving forward. I think this is a positive mood as it allows the company to reduce their debt load. Telefonica has some valuable minority interests but unfortunately it is not a really good time to divest them because valuations are so depressed in the telecom industry. I think fears over Telefonica's balance sheet are overblown but at the same time I never encourage high leverage ratios. Their leverage has reduced their flexibility to buy back stock at the absurd price that it currently trades at, so the sooner the situation is rectified the more quickly the stock is likely to appreciate.
http://www.bloomberg.com/news/2012-06-10/telefonica-to-sell-part-of-china-unicom-stake-to-pay-down-debt.html
http://seekingalpha.com/article/632291-telefonica-a-tale-of-two-worlds
Disclosure: I am long TEF.

Stocks: TEF

Back To Tim Travis' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.