Telefonica Group has written down the value of its Venezuelan assets in response to the country’s currency weakening.
The Venezuelan bolívar fuerte’s value has been revised from 12 to the dollar down to 50 to the dollar, resulting in Telefonica’s Venezuelan assets dropping by €2.84 billion in value.
The writedown covers a substantial portion of the profits that the Venezuelan government had forbidden Telefonica from expatriating to Spain. These have been written down by €1.23 billion.
The group will adjust its results for Venezuela following the writedown, with operating profit set to fall by €915 million. Net profit is down €399 million.
However, Telefonica has stated that it will continue to invest in the country, stating: “Telefónica wishes to emphasise that these adjustments do not affect the investment nor growth plans in Venezuela in terms of bolivars, reaffirming the commitment of the company to continue developing telecommunications in the country, recently reflected in the allocation of spectrum that will materialise shortly with the launch of 4G.”