Liberty Latin America Purchases Telefonica Costa Rica

Telefonica announced that it had reached an agreement with Liberty Latin America for the sale of the entire capital stock of its operation in Costa Rica, a transaction totaling $500 million.

Thursday, July 30, 2020

This is the second time that the sale of the capital stock of the telephone company's operation in Costa Rica has been reported. At the beginning of May 2020 it was reported that the first attempt had failed, after Millicom announced that it had made use of its right to terminate the Share Purchase Agreement for the acquisition of Telefonica's operating subsidiary in the Central American country.

See "Telefonica Starts Selling Assets in the Region"

From the Telefonica announcement:

Madrid, July 30, 2020 - Telefonica has reached an agreement with Liberty Latin America for the sale of the entire share capital of its Costa Rican operation.

The total amount of the transaction (enterprise value) has been set at 500 million US dollars (approximately 425 million euros at current exchange rates) and implies a multiple of approximately 7.4 times the company's OIBDA 2019. The multiple is in line with the one reached just over a year ago for all of Telefonica's businesses in Central America, and will generate capital gains for the Telefonica Group of approximately 210 million euros (pre-tax) and reduce the Telefonica Group's net debt by approximately 425 million euros.

This agreement is another example of how Telefonica continues to meet its strategic commitments set out last November. This transaction has been closed only three months after the previous buyer decided not to comply with the transaction agreed one year earlier.  It highlights Telefonica's ability to execute in complex times such as the present, and joins the operations announced in recent months.

The closing of the agreement reached today is subject to certain conditions, including the necessary regulatory approvals.

Moreover, Telefonica stresses that it maintains the legal action initiated against Millicom last May for unjustified failure to comply with the terms of the agreement reached in 2019 and will demand compensation for all damages that this failure has caused to the company.

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More on this topic

El Salvador: Telefonica's Purchase Conditioned

August 2020

One of the conditions for authorizing the acquisition is that America Movil must relinquish the right to operate 25 MHz of radio spectrum with national coverage in the 850 MHz band and 30 MHz of radio spectrum with national coverage in the 1900 MHz band, which currently belong to Telefonica.

According to the technical, legal and economic analysis carried out, it was warned that the acquisition would result in limitations to competition in the markets for mobile and fixed telephony and business connectivity services. Therefore, the Board of Directors of the Superintendence of Competition (CDSC) decided to impose a set of conditions to repair the damages, which include enforcement measures prior to the closing of the transaction (ex ante) and a series of subsequent obligations (ex post) in order to counteract such limitations, informed the Superintendence of Competition (SC).

Telefonica Purchase Completed in Panama

August 2019

Millicom announced that it completed the acquisition of Telefonica Moviles Panama, S.A. through its subsidiary Cable Onda.

In February of this year, Telefónica announced that it had reached an agreement with Millicom S.A. for the sale of all of the company's shares in Panama.

Telefonica Completes Sale of Assets in Nicaragua

May 2019

The company reported that it has transferred the entire share capital of Telefónica Celular de Nicaragua, S.A. to Millicom International Cellular, S.A., for a price of $437 million.

On May 16, Telefónica S.A. reported that "Following the communication published on February 20, 2019 (with entry registration number 274959), Telefónica announces that once the relevant regulatory approvals have been obtained, Telefónica Centroamérica Inversiones, S.L.., a company owned, directly and indirectly, 60% by Telefónica and 40% by Corporación Multi Inversiones, has today transferred the entire share capital of Telefónica Celular de Nicaragua, S.A. to Millicom International Cellular, S.A. for a price of 437 million dollars, approximately 390 million euros at the current exchange rate". Consult Telefónica's full press release.

Telefonica Sells Its Assets to Millicom

February 2019

The company reported that it signed an agreement with Millicom S.A. for the sale of all shares of Telefonica Costa Rica, Nicaragua and Panama, closing the transaction at $1.65 billion.

After the company reported in late January 2019 that for $648 million it had agreed to sell to America Móvil all the shares of Telefonica Guatemala and 99.3% of Telefonica El Salvador, it now announced that it had completed the sale process of the entire operation in Central America.

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