BBVA, Telefonica exposed to Venezuela devaluation

MADRID Mon Feb 11, 2013 10:38am EST

MADRID Feb 11 (Reuters) - Venezuela's currency devaluation is likely to take a heavier toll on Telefonica and BBVA than other Spanish companies, shrinking the value of their dividends and assets in the country by as much as a third.

Both are major players in Venezuela, which said on Friday it was devaluing the bolivar to 6.3 per U.S. dollar from 4.3 per dollar from Feb. 13 in an attempt to shore up government finances.

Telefonica's shares were down 1.3 percent at 9.9 euros at 1621 GMT, while BBVA was down 0.8 percent at 7.3 euros.

Telefonica is waiting to repatriate dividends worth 1.01 billion euros ($1.35 billion), which will now be worth 691 million euros, Banco Sabadell analysts estimated.

Bank BBVA has been unable to repatriate dividends from Venezuela in recent years. It has assets there worth 20 billion euros through its 55.6 percent stake in Banco Provincial, which will now be worth 13.6 billion euros.

Venezuela accounts for 9 percent of BBVA's operating profit, according to the lender's 2012 accounts. Banesto Bolsa analysts said the 32 percent currency devaluation could reduce the value of the BBVA group as a whole by 1.7 percent, without taking into account hedging.

A BBVA spokesman said the currency move would have a "very moderate" effect on the company's capital.

"The impact as far as profit and loss goes will hardly be noticed in 2013 because the bank in Venezuela has positions in dollars that basically compensate for the impact of the devaluation," he said.

Telefonica, Europe's biggest telecoms operator by revenue, is also the telecoms market leader in Venezuela and generates 6.5 percent of its operating income in the country, according to its results from the third quarter of 2012.

Morgan Stanley forecast a 2 percent hit to Telefonica's operating income. The company declined to comment on the impact of the devaluation.

Many Spanish companies expanded into Latin America in the 1990s, taking advantage of shared language and cultural connections but leaving them open to currency and political risk. Last year, the Argentine government expropriated oil firm YPF from Spain's Repsol.

Morgan Stanley said the European companies most likely to be affected by the devaluation were Spanish insurer Mapfre , oil firm Repsol, BBVA and Telefonica, as well as French companies Sodexo and Edenred.

Edenred said the bolivar devaluation would dent its revenues by 1.3 percent.

Mapfre generates 3 to 4 percent of profits in Venezuela, Morgan Stanley said, while Repsol was likely to see a low single-digit hit to its valuation and earnings.

A Spanish news outlet reported on Monday that Telefonica had scrapped plans to float its Latin American businesses. ($1 = 0.7474 euros) (Reporting by Robert Hetz and Clare Kane; Writing by Clare Kane; Editing by Louise Ireland and Tom Pfeiffer)

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