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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 $14.3 billion and a strong InvestingPro Financial Health score of GREAT, has announced plans for a reverse and subsequent forward stock split. According to InvestingPro analysis, the company appears undervalued at its current price of $8.68, making it particularly interesting for value investors. The company’s Board of Directors has approved the proposal to reverse split all common shares at a ratio of 40-to-1, followed by a forward split where one consolidated share will be split into 80 shares. This operation, set to be deliberated at an Extraordinary Shareholders’ Meeting on March 13, 2025, will not alter the company’s capital stock value but will adjust the number of total shares.
The initiative aims to enhance the liquidity of the company’s shares and improve the price formation process by increasing the number of shares actively traded and adjusting their market price. With a P/E ratio of 15.26 and a notable dividend yield of 4.29%, the company has maintained dividend payments for 27 consecutive years. Additionally, the operation seeks to reduce operational costs, streamline shareholder base management, and improve efficiency in share registration and custody systems. For deeper insights into Telefonica Brasil’s financial metrics and growth potential, InvestingPro subscribers can access comprehensive analysis and additional ProTips. It also aims to enhance shareholder communication and the distribution of proceeds to shareholders.
Shareholders will be given a Position Adjustment Period of at least 30 days, following the Executive Board’s determination of the operation’s commencement date, to align their holdings into multiples of 40 shares, if necessary. Post this period, any fractional shares resulting from shareholders who have not adjusted their positions will be grouped, auctioned, and the proceeds will be distributed proportionally.
The proposed operation will apply to all shareholders and will not change the value of the company’s share capital or the rights of the shares. It will, however, modify the number of shares that each American Depositary Receipt (ADR) represents, with one ADR representing two common shares post-operation, without changing the total number of outstanding ADRs.
Further details regarding the implementation of the operation, including the Position Adjustment Period and auction procedures, will be disclosed by the company in due time. This announcement is based on a press release statement from Telefonica Brasil. Discover more detailed analysis and insights about Telefonica Brasil, including its comprehensive Pro Research Report, along with 1,400+ other top stocks, exclusively on InvestingPro.
In other recent news, Telefonica Brasil has been making significant strides in both financial and regulatory fronts. The company announced a capital reduction of R$2 billion, which will decrease its share capital from R$62.07 billion to R$60.07 billion. This development will return funds directly to shareholders, with the payment expected to be made by July 31, 2025.
Simultaneously, Telefonica Brasil has reached a regulatory agreement with Brazilian authorities, allowing the company to transition from its current service model. The company signed a Self-Composition Agreement with the National Telecommunications Agency (ANATEL), the Federal Court of Accounts (TCU), and the Federal Union through the Ministry of Communications. This regulatory milestone is expected to provide the company with greater operational flexibility.
Furthermore, the Federal Court of Accounts has granted unanimous approval for the adaptation of Telefonica Brasil’s existing Switched Fixed Telephone Service Concession Contracts into Authorization Instruments. This approval is expected to align Telefonica Brasil’s operations more closely with current market dynamics and regulatory environment.
The company has also been recognized for its sustainable business practices, securing a place in the Dow Jones Sustainability World Index for 2025. This highlights Telefonica Brasil’s commitment to creating value for stakeholders while maintaining sustainable business practices.
Lastly, the company held its Q3 2024 earnings call, led by CEO Christian Gebara and CFO David Melcon. The executive board expressed confidence in the company’s business prospects, indicating a positive future outlook. However, potential risks and uncertainties tied to macroeconomic scenarios and industry-related factors were acknowledged.
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