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20 Mar 2019, Stella Zlatareva, EMIS M&A Team

Telefonica withdraws from Central America in USD 1.65bn sale of local units

In February 2019, telecoms giant Telefonica announced its exit from all remaining mobile businesses in Central America. In a deal with Luxembourg-based peer Millicom, the Spanish group is selling its mobile operations in Costa Rica, Nicaragua, and Panama for an enterprise value of USD 1.65bn. The sale comes roughly a year after Telefonica CEO Jose Maria Alvarez-Pallete spoke to media about the various strategic options his company was weighing about its units in Latin America, especially the undervalued ones. The telco has been quick to act on these plans, as earlier in 2019 it struck the sale of its operations in Guatemala and El Salvador to Mexican rival America Movil. For the Spanish company the units are rather small – they accounted for about 2% of its total revenues in 2018 – and take the focus away from its core markets. Together, the two transactions will bring Telefonica a much-needed debt reduction of around USD 1.4bn.

Telefonica’s mobile arms in Panama, Costa Rica, and Nicaragua are among the top two mobile operators in their respective countries. For Millicom, the acquisition adds mobile to its existing cable footprint in the countries in question and is expected to result in significant synergies. Millicom’s latest move comes on the heels of its 2018 acquisition of an 80% stake in Panamanian cable and fixed telecoms company Cable Onda for USD 1bn.

Find more about this deal on EMIS DealWatch, and find out more about EMIS. Original source: EMIS - DealWatch