Telefónica revises its accounts in Argentina for hyperinflation | Economy

Telefónica has restructured its accounts in Argentina downwards as a result of the strong increase in inflation in the country during the third quarter of the year, which has led to an approximate reduction in net sales of 625 million euros as of September 30. of this year, according to the company in its continued brochure.
As a result of this "hyperinflation", which in the accumulated in the last three years exceeds 100%, the Spanish company also recorded an increase in net worth of about 1,300 million euros, while subtracted 215 million euros to the gross operating profit (Oibda) and 265 million euros to operating income. In addition, the operating cost (capex) was reduced by about 115 million.
Telefonica said in the document that it expects that the measures announced by the Argentine government following the agreement with the International Monetary Fund (IMF) have a "positive impact in the medium term", but in the short term, the macroeconomic and exchange rate risks remain "high" .
"The enormous challenges facing the economy, both internal (high inflation and public deficit), and external (significant financing needs), make it an economy vulnerable to episodes of financial market volatility," he says.
The Spanish multinational highlighted risks for its business in Latin America, Telefonica highlights the foreign exchange risk derived from both external factors (the normalization of monetary policy in the United States, the prices of raw materials and doubts about China) and internal (high fiscal and current account deficits in some countries, low productivity growth and rebalancing of existing adjustments).
Regarding pending litigation due to regulatory and fiscal issues, as of December 31, 2017, all processes in Brazil maintain a cumulative number of possible contingencies, including interest penalties and other items, of 18,968 million Brazilian reais (approximately 4,761 million euros) ), although all the processes related to these matters are being contested. For its part in Peru, the group maintains a provision in its financial statements that at December 31 rises to 1,653 million Peruvian soles (about 425 million euros).
Impact for Catalonia
The company presided by José María Álvarez-Pallete does not leave out the risks due to the independence threat in Catalonia. In the brochure sent to the National Securities Market Commission (CNMV), he points out that the political situation in Catalonia and its impact on the Spanish economy is "a possible source of uncertainty" for Telefónica's business due to its exposure to the country, and remember that Spain represents 25.7% of its income, according to the accounts of the first semester.
Thus, he points out that although recent events are helping to reduce instability, if political tensions re-emerge or intensify, "this could have a negative impact on both financial conditions and the current macroeconomic Spanish scenario."
Regarding Brexit, he points out that it will mean an "economic adjustment" regardless of the new economic-commercial relationship between the United Kingdom and the rest of Europe in the future, but adds that in the case of the operations of its subsidiary O2 and the rest of the group will not be "significant", because there is "scarce commercial relationship between the two".
However, he warns that uncertainty during negotiations can affect investment, economic activity, employment and volatility in financial markets, "which could limit or condition access to capital markets."