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Telefonica takes EUR 2.84 bln hit due to bolivar devaluation
2015-02-17 08:43:00| Telecompaper Headlines
(Telecompaper) Telefonica has announced that it has cut the value of its net assets in Venezuela by EUR 2.84 billion following last week's effective devaluation of the bolivar of around 70 percent. In a statement to Spain's market regulator CNMV, Telefonica said its profits and balance sheet would be seriously hit by the Venezuelan government's decision to introduce a new free-floating exchange rate. At 31 December, Telefonica valued its assets and income from Venezuela at 50 bolivares to the dollar, using the Sicad 2 exchange rate system, down from 12 bolivares to the dollar previously. As a result of the write-down and the significant amounts of retained profits that Venezuela barred the company from expatriating to Spain, Telefonica said its full-year operating profit would fall by EUR 915 million and net profit by EUR 399 million, while net financial assets in Venezuela would be reduced by EUR 1.23 billion. Although the write-down leaves the company with cash valued at EUR 390 million in Venezuela, future plans to invest in the country wouldn't be affected, added Telefonica. However, the percentage of the company's total revenue coming from Venezuela has been reduced to around 1 percent, compared to 6 percent of Telefonica's total revenue in 2013. Telefonica is due to report its full-year results on 25 February.
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Category:Telecommunications