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Telefonica (BME:TEF) Brasil (NYSE:VIV) S.A. (B3: VIVT3; NYSE: VIV), a leading telecommunications company with a market capitalization of $15.39 billion and strong financial health rating according to InvestingPro, has declared that its previously announced capital reduction process is now fully effective as of Monday.
The company will proceed with the restitution to shareholders, with a payment of R$1.22651176012 per common share, which is subject to change based on the shareholding base on February 27th, 2025.
The capital reduction, which was approved at an Extraordinary Shareholders’ Meeting on December 18th, 2024, has reached the end of the deadline set by Article 174 of the Corporations Law. The company, which maintains an attractive P/E ratio of 15.26 and has demonstrated consistent dividend payments for 27 consecutive years, continues to show strong financial management with a healthy free cash flow yield of 11%.
Shareholders on the company’s records at the end of February 27th, 2025, will be entitled to the capital reimbursement. Following this date, the company’s shares will be traded ex-reimbursement rights.
Payment of the capital reduction will be made in a single installment on July 15th, 2025, to each shareholder proportionate to their stake in the company’s share capital. Shareholders with a banking option at Banco Bradesco S.A. will receive direct deposits, while others may need to visit a branch with identification.
For tax purposes, the capital gains from the reduction may be subject to income tax for both resident and non-resident shareholders in Brazil. The company will withhold income tax on capital gains for non-resident shareholders, with rates ranging from 15% to 25% depending on the jurisdiction and shareholder category.
Non-resident shareholders must provide necessary information for the calculation of the withholding tax by March 10th, 2025. Failure to provide this information or any inaccuracies may result in the capital reimbursement being considered entirely as capital gain or a flat tax rate of 25% being applied.
This announcement is based on a press release statement and aims to keep shareholders informed about the latest developments in the capital reduction process and the associated tax implications.
According to InvestingPro analysis, the stock currently appears undervalued, with 8 additional key insights available to subscribers, including detailed financial health metrics and growth projections.
For comprehensive analysis, access the Pro Research Report, part of InvestingPro’s coverage of over 1,400 US equities.
In other recent news, Telefonica Brasil has announced several significant developments.
The company has unveiled plans for a reverse and subsequent forward stock split, aimed at enhancing the liquidity of its shares and improving efficiency in share registration and custody systems. Furthermore, Telefonica Brasil has been included in the Dow Jones Sustainability World Index, reflecting its commitment to sustainable business practices.
In addition to these developments, Telefonica Brasil has announced the cancellation of 1.33% of its capital stock, previously held in treasury. This move is part of the company’s ongoing capital management strategies. The company has also announced a capital reduction of R$2 billion reais, which will return funds directly to shareholders, demonstrating its commitment to delivering shareholder value.
Telefonica Brasil has finalized a Self-Composition Agreement with Brazilian regulatory authorities, allowing it to transition from a Switched Fixed Telephone Service concession contract to an Authorization regime. This regulatory milestone is expected to provide the company with more operational flexibility.
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