| Is Telefonica a maverick or a trend-setter? The Spanish telecom giant kicked off the New Year by exploding the traditional strategy of multinationals to maintain or increase separate stock market listings for their foreign subsidiaries. It said it was taking private four of its quoted Latin American minorities. The market's reaction was almost unanimous: good for Telefonica (the shares soared 6.1% on the announcement), maybe not so good for Latin American stock markets. Telefonica bid a 40% premium to the average price over the last five trading days for each company, a "good and fair deal" says Tim Hirst, telecom analyst at Salomon Smith Barney in London. In each case the parent is offering its own stock in exchange for local stock, entailing the issue of 922 million new Telefonica shares. The company is tendering for Telsp Fixa and Telesudeste Celular of Brazil, Telefonica de Argentina and Telefonica del Peru (TDP). Peter West, chief Latin American strategist at Spanish broker BBV Securities, believes the move could establish Telefonica as a market trend setter. "By breaking things up into distinct business lines Telefonica is offering more potential for growth and offering investors a chance to get in on this growth," he says. |