Telefónica Hispam will grant a credit line of nearly 400 million euros to meet operational cash needs
MADRID, 14 (EUROPA PRESS)
Telefónica Peru has requested voluntary bankruptcy protection in order to address the financial restructuring and operational needs, as reported by the telecom company through the National Securities Market Commission (CNMV) late this Friday.
«In order to achieve an orderly restructuring of Telefónica Peru’s liabilities, it is reported that the board of said company has agreed today for Telefónica Peru to join the ordinary bankruptcy proceeding established in Peruvian regulations. The decision to enter into bankruptcy proceedings is aimed at the financial restructuring and operations of Telefónica Peru within the applicable bankruptcy legal framework,» the statement sent to the CNMV indicates.
In this context, Telefónica Hispanoamérica has granted a commercial credit to the Peruvian subsidiary of up to 1.549 million Peruvian soles, around 400 million euros at the current exchange rate, for a period of 18 months.
The purpose of the credit line granted by Telefónica Hispam to the Peruvian subsidiary is to maintain operations and reach a solution, although the funds will only address the operational cash needs.
Telefónica Peru has emphasized that the decision to file for bankruptcy is mainly due to the financial and administrative situation that the subsidiary has been facing for two decades due to its disputes with the National Superintendence of Customs and Tax Administration (SUNAT) in the country.
«As is publicly known, the financial situation of Telefónica Peru has been greatly affected by tax contingencies over 20 years old, as well as by administrative decisions that have placed the company at a competitive disadvantage in a particularly challenging market environment,» the statement sent to the CNMV adds.
«In relation to the aforementioned tax contingencies, Telefónica has an ongoing arbitration with the International Centre for Settlement of Investment Disputes (ICSID),» it further states.
On the other hand, the company has highlighted that Telefónica Peru’s liabilities are «not guaranteed by any other entity of the Telefónica group» and will continue to «explore strategic alternatives» for its subsidiary in the South American country, such as a possible sale.
Moreover, Telefónica Peru’s entry into bankruptcy does not imply a suspension of services or immediate liquidation.
«The company will continue to provide uninterrupted services to its more than 13 million customers in urban and rural areas of Peru,» clarified the subsidiary in a statement.
«After evaluating different alternatives to ensure the financial stability of the company, we concluded that voluntarily filing for bankruptcy is the best way to protect the provision of telecommunications services to the Peruvian population. We are focused, along with employees and suppliers, on ensuring the long-term continuity of Telefónica Peru, fulfilling our regulatory commitments,» emphasized Telefónica Peru’s CEO, Elena Maestre.
The company has also announced that it has hired the financial advisory consulting firm Kroll to organize the process, and in fact, a member of this firm will join the team as the Restructuring Director.
DISPUTE WITH SUNAT
Last year, Telefónica’s subsidiary in Peru reported the payment of 1.361 million soles (350 million euros) to SUNAT in compliance with a court ruling related to the Income Tax declaration for the fiscal years 2000 and 2001.
«Years later, as a result of a tax audit, SUNAT objected to expense deductions, leading Telefónica to accept and pay some of them. It also included other resources mainly related to the provision for doubtful collections and financial interests, which were the subject of dispute in a process that lasted more than two decades,» the company stated at that time.
Telefónica, which had already made provisions regarding this matter, questioned at that time «the actions taken by the tax authority» considering them «arbitrary and lacking any basis.»
However, in September 2024, the Peruvian court ordered the South American state to return 347 million soles (almost 88 million euros) to Telefónica, corresponding to the Income Tax for the year 2000.
IMPACT ON LATEST RESULTS
In this context, it is worth noting that the impact of Telefónica’s subsidiary in Peru was already reflected in the results presented by the group at the beginning of last November, for the first nine months of the fiscal year.
Specifically, Telefónica reported a net profit of 989 million euros in the first three quarters of the year, a 21.7% decrease compared to the 1,262 million euros from the same period in 2023.
Regarding this, the company pointed out that one of the main extraordinary impacts that caused this 21.7% drop in net profit reported until September was the accounting adjustment in its Peruvian subsidiary due to impairment of goodwill and other intangible assets, with no cash effect, amounting to 314 million euros.
The company will present its results for the entire 2024 fiscal year on February 27th.
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FUENTE