UPDATE: Telefonica Sees Savings In Brazil Of Up To EUR4.2 Billion

Spanish telecommunications giant Telefonica SA (TEF) said Friday it forecasts between EUR3.3 billion and EUR4.2 billion in synergies from merging mobile company Vivo Participacoes SA (VIV) and its fixed-line company Telecomunicacoes de Sao Paolo S/A (TSP), or Telesp.

After a long tussle, Telefonica in July reached an agreement to pay Portugal Telecom SGPS SA (PT) EUR7.5 billion for its half of Brasilcel, the joint venture through which the two companies controlled Vivo.

A key rationale for the deal for Telefonica was the opportunity to merge Vivo with Telesp, which would allow it to cut operating expenses and offer customers more services in the fast-growing Brazilian market.

In a Spanish regulatory filing, Telefonica also said it would book a gain of EUR3.5 billion in the third quarter after adjusting upwards the book value of its Vivo stake prior to its purchase of PT's stake in order to reflect that transaction's value.

Telefonica added it is on track to meeting its target of a 2010 dividend per share of EUR2.1.

-By Jonathan House, Dow Jones Newswires; +34 91 395 8121; jonathan.house@dowjones.com

Telefonica Brasil (NYSE:VIV)
Historical Stock Chart
From Apr 2024 to May 2024