Telefónica Posts US$1.4bn Loss as Chile Exit Looms
Telefónica, the Spanish telecommunications giant, is rapidly advancing its withdrawal from most Latin American markets, consequent to a significant first-quarter net loss and a series of high-profile disposals.
Its Q1 2025 financials reveal a net loss of US$1.4bn, a sharp reversal from the US$598m profit recorded in the same period last year.
The downturn is largely attributed to accounting losses from discontinued operations, particularly in Argentina and Peru, where Telefónica has recently completed its divestment.
Chile in the spotlight: advisory mandate and sale prospects
Telefónica has engaged Citigroup Inc. to advise on the sale of its Chilean business, Telefónica Chile SA, following several quarters of losses and as part of its broader Latin American exit strategy.
According to El Confidencial, the Chilean unit could fetch just under US$1.1bn, though it anticipated capital loss. It is further engaging with Rothschild and Banco Santander to facilitate exits from other Spanish-speaking Latin American markets, including Mexico, Ecuador, and Uruguay.
Financial performance: impact of disposals and continuing operations
Telefónica’s Q1 report details an accounting loss of US$1.9bn from discontinued operations, with Argentina accounting for US$1.35bn and Peru for just over half a billion US dollars. The sale of the Argentine business in February and the Peruvian unit in April were both executed at substantial losses.
Despite the setbacks, the company reported a profit of US$479m from continuing operations, albeit down from US$646m in Q1 2024. Group revenue declined by 2.9% to US$10.3bn, though organic growth stood at 1.3%.
Emilio Gayo, who was recently named as COO of Telefónica, stated: “The results for the first quarter meet our expectations, while free cash flow reflects the usual seasonality. The Group’s results will improve throughout the year, in line with our forecasts for 2025.”
Strategic review and leadership changes
Telefónica’s leadership transition has brought renewed focus to its core markets and operational efficiency. Marc Murtra, appointed CEO in January, has initiated an ambitious strategic review aimed at consolidating the company’s European footprint and simplifying its structure.
Marc’s vision is clear: “Our priority will be Europe, Europe and Europe, we will maintain our leadership position in Brazil as a core market and we will focus on what we know how to do as an industrial operator."
Emilio reiterated that Telefónica will present the outcomes of its strategic review in the second half of the year, signalling further changes ahead. There is further speculation about additional job cuts as part of Telefónica’s efficiency drive, though management has yet to provide details.
Latin American divestments: a broader trend
Telefónica’s retreat from Latin America is not new. It has progressively exited markets such as El Salvador, Costa Rica and more recently, Argentina and Peru.
Its remaining Latin American operations, aside from Brazil, are now considered non-core, with disposals in Mexico, Ecuador, and Uruguay actively under consideration. Its strategy is to focus resources on Spain, Brazil, the UK, and Germany, where returns are more attractive relative to capital costs.
Outlook: sharpened focus, anticipated recovery
Despite the immediate financial impact of its Latin American disposals, Telefónica remains committed to its strategic realignment. It has maintained its 2025 outlook and dividend plans, with a cash dividend of US$0.34 per share confirmed for the year.
Management is confident that, by shedding underperforming assets and concentrating on core markets, Telefónica will achieve healthier financials and deliver greater value to shareholders.
“During the second half of the year, we will present the conclusions of the strategic review we are conducting,” Emilio confirmed.
Telefónica’s decisive actions mark a significant transformation for the operator, positioning it to compete more effectively in its chosen markets and navigate the evolving global telecommunications landscape.
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