In a development that has stimulated the Brazilian stock market, Telefonica Brasil (NYSE:VIV), also known as Vivo, witnessed a 2.4% increase in its share prices on Monday. This comes after the telecom regulator approved a capital reduction plan proposed by the company. The shares of Vivo reached an impressive 44.31 reais, equivalent to $9.14, marking a 13% rise from the year-end through last Friday.
The capital reduction plan, which could go up to BRL5 billion, had earlier this year received approval from Vivo's board of directors. The proposal was made in response to Brazil's telecoms regulator and is expected to notably improve shareholder returns, according to an analysis from BTG Pactual.
Following this regulatory approval, the capital reduction plan now awaits consent from shareholders. Once obtained, there will be a 60-day window for creditor opposition. After this period, Vivo will have the freedom to decide on the timing and method of payments to its shareholders.
Monday's positive news about Vivo also had a knock-on effect on Brazil's Ibovespa stocks index, which saw a 0.4% rise in midday trading. This illustrates the significant role major companies like Vivo play in shaping market trends and investor sentiment in Brazil.
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