Morningstar Rating

Stock Research and Analysis

by Allan C. Nichols, CFA

Bulls Say

Historically, Latin America provided Telefonica with some of the fastest growth of the European incumbents. However, this growth is slowing, and recently Latin American currencies have mostly been dropping faster relative to the euro than the Latin operations' revenue is growing.
Telefonica has some of the highest operating margins in Europe, particularly in Spain.
Telefonica's German subsidiary has acquired E-Plus from KPN, making it the largest wireless operator in the country by the number of subscribers. Read more 

Bears Say

Volatile currencies in Latin America can negate growth when translated back to the parent company. This is evidenced by several devaluations in the Venezuelan bolivar and recent volatility in the Argentine peso and Brazilian real.
America Movil is a well-run competitor in Latin America with a strong balance sheet, unlike Telefonica.
The acquisitions of E-Plus and GVT have once again pushed up Telefonica’s debt levels, restricting its financial flexibility. Read more 


Cesar Alierta became chairman and CEO in August 2000. He was formerly CEO of Tabacalera, a tobacco firm he led in a merger with Seita to create Altadis. Alierta has strong capital markets experience and has brought in many new managers to help run the   Read more 


Telefonica is the incumbent fixed-line and wireless telephone operator in Spain. It has the second-most wireless subscribers in the United Kingdom, and with the acquisition   Read more 

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