Telefónica has completed the sale of its 67.5% stake in Colombia Telecomunicaciones, which operates under the Movistar brand, to the telecoms group Millicom, according to a filing with Spain’s stock market regulator, the CNMV.
The deal
Millicom is paying $214 million, about €182 million, for the stake. The headline price is modest, but because the Colombian business carries its own debt, which leaves Telefónica’s balance sheet with the sale, the transaction will reduce the group’s net financial debt by around €1.55 billion.
The final price was lower than figures reported when the deal was first announced, reflecting adjustments of the kind that are common in such transactions.
Leaving Latin America
The sale is part of Telefónica’s strategy, led by its executive chairman, Marc Murtra, of withdrawing from most of its Latin American markets to focus on its core countries: Spain, Brazil, Germany and the United Kingdom.
In the past two years it has sold its businesses in:
- Argentina, to Grupo Clarín’s Telecom Argentina;
- Peru, to Integra Tec International, for a symbolic price, with the buyer taking on the subsidiary’s debt;
- Uruguay and Ecuador, both to Millicom.
Telefónica is also working on exits from its remaining Spanish-speaking markets in the region, including Chile, Mexico and Venezuela.
Two decades in Colombia
Telefónica entered Colombia through acquisitions in 2005 and 2006, and says it has invested in broadband, fibre-optic networks and mobile coverage across the country during that time.
What comes next in Colombia
Millicom already operates in Colombia under the Tigo brand. Combining Tigo and Movistar will create a stronger competitor to the market leader, Claro, owned by Mexico’s América Móvil. The Colombian government, which holds the remaining 32.5% of Colombia Telecomunicaciones, is expected to sell its stake as part of the process.
For Telefónica, the deal is another step towards a simpler, less indebted group — a priority for investors since the arrival of its new leadership.
