Telefónica consolidates the 4 euros with increases of 0.5% supported by Italy and Criteria

The advances towards a greater consolidation of the telecommunications sector in the transalpine country encourage the taking of positions in the Spanish one.

Telefónica headquarters in Madrid.

Telephone stood out this Monday with advances of 0.46% -which in the middle of the session reached 3.5%- against the current of an Ibex 35 in clear decline. The operator got consolidate above the key level of 4 euros per share supported by a new round of purchases of Criteria Caixa and the possibility that two of its rivals combine their businesses in Italy.

In intraday highs, Telefónica reached 4.14 euros per share, which remained at 4.022 euros at the close. Quite an achievement if one takes into account that the Ibex 35 lost 3.2% this Monday in its worst session in the last two months, with losing 277 points in one go. Thus, this was the eighth consecutive session in which the operator moved above the key reference of 4 euros per share.

One of the engines of this upturn against the current was in the possibility of Iliad and Vodafone merging their businesses in Italy. An operation that both companies would currently be studying, as published this Sunday Reuters.

Although the transaction would be in its earliest stages, corporate movements in the sector have always been good for Telefónica’s listing.

If the talks where it is the most fragmented and competitive European market of Europe for the sector, a firm with a penetration in the mobile market of around 36% would be created. In addition, their combined income would be around 6,000 million euros and there would be a certain de-escalation in the fierce price war that is being experienced in the country.

Criteria’s purchases

As if that were not enough incentive to boost purchases at Telefónica, this Monday Criteria Caixa has notified a new acquisition of operator shares. And not just any, but the most bulky so far this year.

On this occasion, the investment arm of the financial group La Caixa has reported the purchase of 30,000 shares of Telefónica at a unit price of 3.99 euros. An operation held last Friday, January 21, which, therefore, mobilized a total of 119,700 euros.

After a particularly intense 2021 in terms of purchases, Criteria continues to increase positions in the heavyweight of the Ibex 35. Thus, so far this year, it has already taken nearly 200,000 shares of Telefónica, for which it has faced a disbursement of more than 750,000 euros.

Furthermore, this time the holding companyhas anticipated more purchases in the future. And it is that the acquisition has been accompanied by the selling options put that give the right to more acquisitions at a softer price than the market price at maturity. A usual strategy for Criteria that, however, had not been produced in several of its latest transactions.

Voluntary terminations

More specifically, 200,000 of these options have been disposed of for a unit price of 0.03 euros. An amount that, as usual, points to the bullish strategy Criteria has been following the Spanish operator for a long time.

Likewise, this Friday it was also known that a total of 2,418 Telefónica Spain workers signed up to the latest voluntary termination plan launched by the operator. A figure that This represents 53.3% of the 4,532 workers who met the seniority requirements and an acceptance of more than 38% of the workforce set for critical areas.

In the opinion of Eduardo Bolinches, an analyst at Invertia, as long as the value respects 4.06 euros per share, its continuity above the level of 4 per share seems to be assured. In fact, it is precisely in this brand where it finds its second most immediate support.

At the top, after an accumulated comeback of 14% in the last year for Telefónica shares, its closest resistance places it at 4,162 euros by title. A level that, according to Bolinches, coincides with its maximum of last year.

this same Monday, Vodafone it shoots up about 5% on the London Stock Exchange against the current of a parquet in which declines also dominate. In the meantime, Telecom Italy (Gruppo TIM) is suffering from the threat that the eventual merger with Iliad would pose to its business with declines of more than 1% on the Milan Stock Exchange.

Marín (Singular Bank) offers 225 million for the client portfolio of UBS Spain

If he took over the Swiss bank business, his goal of going public would be closer. Although Deutsche Bank and LGT are also in the running.

Javier Marín, CEO of Singular Bank.

Javier Marin throw the rest for take over the UBS business in Spain. Singularbank, the private bank he runs with the financial support of American venture capital Warburg PincusHas offered 225 million euros for the client portfolio that the Swiss banking group has in our country. The negotiations are very advanced, although nothing is closed.

As Invertia has been able to confirm with sources well connected with the negotiation, the amount would be payable with a fixed amount and another variable to three years, depending on the capacity of Singular to retain current UBS clients. Despite this, the percentages of each concept have not yet been ascertained.

The offer is for the transfer of the client portfolio and, therefore, the priority option would be given to their respective private bankers joining Singular. In this way, Marín would avoid acquiring the corporate structure, a formula that he has already used quite successfully in the acquisition and subsequent integration of Quintet, the former KBL.

Other banks that are also analyzing the possible exit of UBS from the Iberian market to make a firm offer are the German Deutsche Bank, that it is in the process of rearming its private banking with renowned signings, and LGT, belonging to the royal family of Liechtenstein, as reported by this newspaper. Also the Swiss J. Safra Sarasin, who has been trying to enter the Iberian market with a private bank for more than two years.

UBS Spain handles a business volume higher than the €10.5 billion. Various financial sources point rather to 15,000 million, from investors with high net worth, large fortunes and institutional clients, as well as from third-party investment firms that subcontract to the Swiss for their operations.

Closer to IPO

If Marín finally carried out the purchase of the position of UBS Spain, it would be his fourth corporate operation, not counting the initial acquisition of Self Bank from Société Générale in June 2018, which served him to set up his project on the digital investment bank of independent private banking, Singular Bank.

In June 2020, he took over the broker MG Values, which had a turnover of 520 million euros. This was followed by the purchase of the manager Belgravia Capitalwith 170 million, and that of Quintet Private Bank, with 700 million. After these integrations and also thanks to its organic growth, Singular Bank’s total assets under management currently amount to around 5,000 million euros.

The idea of ​​the banker -former CEO of Santander in the last stage of Emilio Botín- since he joined Self Bank has always been to manage 15,000 million in five years and take the current Singular Bank public, the latter a goal that he has publicly acknowledged. If the UBS Spain business grew, it would finally be able to reach or even surpass that level, and it would still have two years left -until 2023- to fulfill its own business plan, execute the integration of the Swiss’s clients and bankers and prepare for Singular’s stock market debut.

Swiss bank UBS logo.

Swiss bank UBS logo.

To approach the purchase, you would need to carry out a capital increase that Marín and the rest of the managing partners would support in a minority and in which the North American venture capital fund Warburg Pincus would have already committed to disbursing the majority of the final amount, according to the newspaper ‘Cinco Días’. UBS has not commented on this, and from Singular Bank they only mention that “our objective is to grow organically and not organically, and we do not rule out any opportunity that arises in the market and that makes strategic sense”.

UBS’s options

Despite the succulence of the offer, the operation cannot be closed for several reasons. In the first place, because there is no formal sale process, although it is true that the UBS headquarters in Switzerland have been considering the possibility of getting rid of their businesses for some time. non-core, including Spain. On the other hand, because there are still more interested parties in the running, such as the aforementioned Deutsche Bank, which has not commented either, LGT or J. Safra Sarasin. And, thirdly, because UBS could ultimately choose to restructure its Spanish business rather than sell it.

The branch of UBS in Spain, which although it has a high volume of assets “is very unprofitable”, say the sources consulted in the sector, earned 4.7 million euros in 2020, 46.5% less than in the year before the pandemic, when it had achieved a result of 8.8 million, according to the EY audit. It has offices in Madrid, Barcelona, ​​Seville, Valencia, Zaragoza and A Coruña and a staff of 200 workers.

The PNV lowers the ‘decree’ against the electric companies to a ‘decree’

The Government will moderate the application of the ‘energy decree’. They will stop attacking the “electric companies” for their “extraordinary profits” derived from the rise in the price of energy, if they meet certain requirements. If they show that they are “good guys” and make their supply contracts reasonable for consumers.

The first thing is to clarify that are not extraordinary profits per se. Accounting, that figure responds to those achieved by a company in operations outside the object of its business. For example, if a food or energy distributor makes a profit by selling a building it owns, that profit shows up in its income statement as “extraordinary profits.” What is qualified as extraordinary profits of the electric companies are not such. They are profits derived from the current operations of these companies. Greater than in other circumstances, but ordinary.

So in the event that the Government wanted to expropriate these “ordinary benefits” it would have to calculate them. Not as extraordinary, but as supplementary ordinary and it would not be clear what they are. Something that would lead to litigation, which could end up in court. Technically the discussion is complex. Better not get into trouble because as the legal saying goes: A bad settlement is better than a good lawsuit. The quick thing would be to reach an agreement between the Treasury and the electric companies. What would probably be a fact of image and propaganda rather than something significant.

In addition, the Government does not say How will you check the “reasonableness” of the contracts? to consider that the electric companies have behaved properly. Absence that allows us to suspect that what the Government has said to the electricity companies is that they are not going to demand what the Decree says.

It will be enough for the energy companies to make some gesture for the Decree to enter a dead end in relation to those improperly called “extraordinary benefits”. That would also be an agreement that would avoid lawsuits against the Government.

In this way, the Government and electricity companies mutually benefit. The Executive with the image that seems to defend consumers. The electricity companies maintaining the benefits that allow them to remunerate their shareholders; both because of the dividends that they are going to be able to distribute, and because of the increase in the stock market price of their shares, because investors see the ghost of the controlling government disappear.

It is clear that United We Can is up to date to demonstrate that it is “the guarantor” in the Government of the real left. So it would not be strange for him to raise his voice in a few weeks when he sees that nor does it lower the electricity bill substantially, nor does the Government mess with the electric companies.

Neither Yolanda Díaz nor Alberto Garzón will be able to shout much. Why? Because this Sánchez-Díaz Government (which tilts Díaz-Sanchez) needs the 2020 Budgets to be approved and this is where the PNV comes into play with its deputies in Congress.

This Sánchez-Díaz Government (which tilts Díaz-Sanchez) needs the 2020 Budgets to be approved and this is where the PNV comes into play

It is the PNV that is going to reduce the decree of the electric companies to a decree. The reader will wonder what benefit Basque nationalism derives from doing this?

It cannot be affirmed that there is a direct relationship in this. However, there is a coincidence that if it were perverse it could be highlighted. The fiscal headquarters of the most important electric company, Iberdrola is in Bilbao. Therefore, it pays taxes to the Provincial Treasury of Vizcaya. One of the three Haciendas that feed the Budget of the Basque Country.

The PNV, which governs in coalition with the PSE, is interested in Iberdrola continuing to be listed in Vizcaya; given the precedent of the companies in Catalonia that left. Iberdrola, provided that the parliamentary situation is the current one, is interested in having its fiscal headquarters in Bilbao; to have a party like the PNV as an interlocutor, which in addition to being nationalist is in favor of the free market, with the nuances that correspond to its Christian Democrat component. A PNV that has the key to many parliamentary issues by completing the majorities.

So PNV and Iberdrola support each other financially and politically. That’s why what seemed like an ‘Electric Decree’ is going to remain a ‘little decree’ (in lowercase). It will be one of the conditions for the PNV to vote on the 2022 Budgets that the Government so badly needs.

*** JR Pin is a professor at IESE.

Forecast for Wednesday, January 13.