Millicom and Telefónica have announced that they have signed a non-binding memorandum of understanding for the possible combination of Telefónica Colombia (Coltel) and TigoUne. The discussions include the potential acquisition by Millicom of Telefónica’s stake in Coltel for approximately $400 million in cash.
Millicom also intends to offer to purchase the minority stakes of La Nación and other shareholders in Coltel for cash at the same price per share offered to Telefónica. Additionally, Millicom plans to propose the acquisition of a 50% stake of Empresas Públicas de Medellín (EPM) in TigoUne for a value comparable to the implied valuation multiple in the Coltel acquisition.
Financing the Investment
To finance the proposed aggregate investment of approximately $1.000 million in cash and assumed debt, Millicom plans to utilize the projected free cash flow over the next 18 months, in line with the company’s long-term plan. This financial strategy reinforces Millicom’s commitment to maintain a strong financial position while expanding its presence in the Colombian telecommunications market.
Impact on Colombia’s Telecommunications Sector
The proposed combined entity would rejuvenate Colombia’s telecommunications sector, forming a robust entity with the financial capacity needed to support significant investments in network and spectrum required to achieve the country’s ambitious digital inclusion goals. At a crucial moment, Colombia will gain a second large-scale and financially viable operator, boosting competition and improving telecommunications services nationwide.
Opportunities and Challenges
The potential acquisition represents a significant opportunity for Millicom and Telefónica to strengthen their positions in the Colombian market. However, it also poses challenges, including integrating operations and aligning corporate strategies to maximize synergies and operational efficiency.
Millicom and Telefónica will proceed with negotiations, evaluating all relevant aspects to ensure that the proposed transaction benefits all parties involved and, above all, Colombian consumers. The combination of Coltel and TigoUne could be a transformative step in Colombia’s telecommunications landscape, ushering in a new era of connectivity and enhanced services for users.
source: The Fast mode