Telefónica prepares for what could happen in Argentina by transferring its subsidiary to a Spanish company

Telefónica prepares for what could happen in Argentina by transferring its subsidiary to a Spanish company

Telephone passed his Argentinian subsidiary to the Latin American holding company on which its other divisions in the region depend. The operation takes place in the midst of the country’s economic and political crisis, and after the Spanish multinational recorded a deterioration, in 2020, of 894 million for his business in Argentina. In this way, an attempt is made to protect against possible eventualities with the expropriation of YPF a Repsol by another Peronist government in memory.

On June 29, Telefónica’s Board of Directors approved the transfer of the direct stake it holds in the Argentinian subsidiaries -Telefónica Móviles Argentina and Telefónica de Argentina- in favor of Telefonica Latin America Holding (TLH)a company domiciled in Spain which includes the rest of the Latin American subsidiaries, with the exception of Brazil.

TLH will increase its capital and the new participations will be assumed by Telefónica. “It is stated that the separate equity does not involve an essential asset of Telefónica or an essential activity carried out by Telefónica, and therefore the approval of the separation by the General Assembly was not necessary”, explains the operator in the announcement of the operation, published in the BOE.

The Spanish company told OKEVERY DAY that the operation is due to “optimization of the structure and management of the company, in line with the actions carried out with Hispam”.

In recent years, Telefónica has not received good news precisely from Argentina, a country in which employs 12,276 people and whom he considers as an accountant hyperinflationaryAs Venezuela.

The group chaired by Jose Maria Alvarez-Pallete In fiscal year 2020, impairment losses on goodwill and other assets in the country amounted to €894 million.

In June of last year, the Argentine government approved by law a increase in the current tax rate, from 30% to 35%retroactive to January 1, 2021.

Moreover, the Spanish operator has been waging a battle in court for almost a decade over the spectrum auction licenses. Telefónica sued the Argentine state over the service supply license agreements and spectrum use authorizations, concluded in 2014.

Telefónica maintains that when these contracts were signed, it was agreed that the services provided by Telefónica Argentina would be freely determined by the company. However, the country imposed that these were public services and that prices would be regulated by the state.

Last September, Telefónica’s request was denied, a decision that has been appealed.

political and economic crisis

The eternal political and economic crisis in Argentina has worsened lately due to the effects of the pandemic and inflationin addition to conflicts within the government.

The tension between the country’s president, Alberto Fernandezand the vice-president, Cristina Fernandezis increasingly palpable, with attacks from the ‘Kirchenism‘ the measures approved to reduce the budget deficit and be able to meet the International Monetary Fund.

Recently, the Minister of Economy submitted his resignation, Martin Guzmanso far a strong man of the President, while the country records a inflation between 50% and 70%.

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