Millicom International Cellular says it has entered into a non-binding memorandum of understanding (MoU) to acquire a 67.50% stake in Colombia Telecomunicaciones (aka Coltel or Telefonica Colombia) from owner Telefonica Hispanoamerica, for approximately US$400 million.
Colombia Telecomunicaciones operates under the brand Movistar and focuses mainly on the telephony and mobile connection businesses. It provides a range of products and services, such as landline, broadband and optic fibre connection, satellite television, and solutions for small, medium and large companies and corporations.
The MoU could mean a merger of Coltel and another operator Tigo Une, the latter owned by Millicom International Cellular and public utility service company Empresas Publicas de Medellin (EPM)
Reports also suggest that Millicom may purchase various minority interests in Coltel for cash at the same purchase price per share offered to Telefonica. Additionally, Millicom apparently intends to offer to purchase EPM’s 50% interest in Tigo Une for cash at a comparable valuation multiple to the one implied by the Coltel acquisition.
Millicom plans to fund the proposed aggregate investment of approximately US$1 billion in cash and assumed debt with equity-free cash flow projected over the next 18 months, consistent with the company’s long-range plan.
The proposed combined entity would, it is claimed, not only be robust but have the necessary scale and financial capacity to support the significant network and spectrum investments required to achieve Colombia's ambitious digital inclusion objectives.
However, the transaction remains subject to negotiation and the signature of agreements with all parties involved. It also requires regulatory and antitrust approvals and may have to meet a number of closing conditions.
