NJJ will maintain a 51% stake within the new JV, with Millicom proudly owning the remaining 49%
In sum – what to know:
Joint construction – Millicom takes a 49% stake alongside NJJ’s 51%, with obligations funded from the acquired firm’s money flows and no recourse to Millicom.
Low upfront fee – Telefónica receives $50 million at closing, with as much as $150 million extra tied to future worth creation.
Choice for full management – Millicom should buy NJJ’s stake in years 5 – 6 at a ten% low cost to its buying and selling multiples.
Millicom Worldwide Mobile and funding group NJJ have agreed to accumulate Telefónica’s Chilean operations by way of a collectively managed automobile, with NJJ holding a 51% stake and Millicom proudly owning 49%.
Underneath the phrases of the transaction, Telefónica will obtain an preliminary fee of $50 million at closing. The settlement additionally consists of potential earn-out funds of as much as $150 million, tied to future structural worth creation throughout the enterprise. These extra funds, in addition to the corporate’s current monetary obligations, will likely be funded from the acquired entity’s personal money flows and won’t be assured by Millicom.
The construction is designed so the acquired enterprise won’t be consolidated into Millicom’s monetary statements throughout the interval of joint possession.
Millicom famous it can function the enterprise from day one and plans to use its regional operational mannequin to enhance efficiency. The corporate has the choice to buy NJJ’s stake in years 5 – 6 after closing, at a valuation based mostly on Millicom’s buying and selling multiples with a ten% low cost, payable in shares. If Millicom doesn’t train this feature, NJJ could have the proper to accumulate Millicom’s stake below comparable phrases.
Millicom mentioned the acquisition of Telefonica’s enterprise in Chile expands its presence in South America whereas limiting upfront monetary publicity and preserving balance-sheet flexibility.
In associated information, Millicom has accomplished the acquisition of Telefónica’s Colombian unit Coltel in a $215 million deal, paving the way in which for a merger with its Tigo operation to strengthen its place within the Colombian market.
In a press release, Millicom mentioned it closed the acquisition of a 67.5% stake in Coltel on February 6 and is now awaiting the second section of the government-led privatization course of to accumulate the state’s remaining shares within the telco.
Millicom, which operates below the Tigo model, has simplified its geographic footprint in recent times. The corporate exited a number of markets in Asia and Africa to focus on Latin America. The corporate presently operates throughout 11 international locations in Latin America and has been buying property from Telefónica in markets corresponding to Chile, Uruguay and Ecuador, because the Spanish group exits lower-growth international locations to concentrate on core markets.
Telefónica has been progressively exiting most worldwide markets since 2019, focusing as a substitute on its core operations in Brazil, Germany, Spain and the UK. Telefonica’s chairman, Marc Murtra, beforehand famous that the corporate’s exit from Latin America, improves its place to undertake consolidation operations within the telecommunications sector in Europe, the place three of its 4 principal markets are concentrated.
