“Blockchain Bonds?” Struggling German Telco Joins Bandwagon

But to no avail for its crushed shares.

Telefonica Deutschland, the struggling German subsidiary of the struggling Spanish telecom giant Telefonica S.A., announced that it issued €200 million of bonds, including a small tranche of undisclosed size, maturing in about one year, with blockchain technology:

For the first time, the transaction will demonstrate the capabilities of the Blockchain technology in combination with a traditional financing process and a larger number of investors. With the innovative use of this digital technology, all participants are promoting the development of more efficient and transparent processes in the German economy.

The company lost €178 million in the first three quarters in 2017 after losing €1.76 billion in 2016. Its shares — the portion that is publicly traded — at €4.10, are down 30% since October 2015. The shares of its Spanish parent, Telefonica S.A., at €8.20, are down 40% over the same period.

The company could certainly do with attracting more shareholder interest.

The company enthused that blockchain technology allows for direct and secure financial transactions in real time by blocks of data that are stored and encrypted on multiple servers. It hopes that the new technology will lower servicing costs and diversify its financing strategy.

But if the plan was to levitate the firm’s shares by adding “blockchain” to the press release, it hasn’t quite worked. Telefonica Deutschland’s shares continue to decline, and the Spanish parent saw its shares close on Friday at the same level as three days ago. It can’t have helped that on the same morning, Spain’s second biggest bank, BBVA, reported that it booked a capital loss of €1.12 billion on its 6.7% stake in Telefonica SA for 2017 — over €300 million more than the bank had provisioned for. Not exactly good PR

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