Telefonica believes that its exit from Latin America improves its place to undertake consolidation operations within the telecommunications sector in Europe
In sum – what you should know:
Telefónica exits proceed – The Spanish operator is in unique talks to promote Movistar Mexico, following gross sales in Argentina, Peru, and Uruguay.
Past ONE expands once more – The Dubai-based proprietor of Virgin Cellular Latin America eyes Movistar to develop its Mexican presence.
Regulatory hurdles loom – A brand new antitrust fee in Mexico might complicate or delay the sale course of.
Spanish telco Telefónica is reportedly in unique talks to promote its Mexican cell enterprise to Past ONE, the Dubai-based firm that owns Virgin Cellular Latin America.
In accordance with a Reuters report citing three unnamed sources, the Spanish telecom group is accelerating efforts to exit a number of regional markets beneath its new strategic plan. Talks with Past ONE over Movistar Mexico are ongoing, and whereas a closing settlement has not been reached, each events are mentioned to be engaged in detailed discussions.
Past ONE has been actively increasing within the area. In 2023, it acquired Virgin Cellular Latin America, which incorporates operations in Mexico, shortly after additionally shopping for Virgin Cellular’s companies within the Center East and Africa.
One of many sources mentioned the creation of a brand new antitrust fee — proposed by Mexico— may delay any telecommunications deal, as a result of it could create uncertainty about acquiring regulatory approvals. The proposed physique would have energy over telecommunications firms.
Telefonica’s resolution to doubtlessly promote its Mexican unit aligns with broader divestment efforts throughout Latin America. It has already agreed to promote its operations in Argentina to Telecom Argentina and has closed offers involving its items in Ecuador, Uruguay, Peru, and Colombia. Telefónica’s chairman, Marc Murtra, believes 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 most important markets are concentrated: Spain, Germany, and the U.Ok.
Monetary consultancy Kepler Cheuvreux estimated in June that Telefonica’s Mexican enterprise might be valued at roughly €520 million ($609 million).
Virgin Cellular, in the meantime, held 7.78% of Mexico’s MVNO market in 2023, in keeping with knowledge from Mexican regulator IFT.
Final month, Telefonica and Millicom Worldwide Mobile confirmed that they had reached a definitive settlement beneath which the latter will purchase 100% of Telefónica’s operations in Ecuador, in a transaction valued at $380 million.
Millicom mentioned that the acquisition of Movistar in Ecuador strengthens its place in South America and deepens its geographic diversification. With the addition of Ecuador — a secure, dollarized economic system with a constructive macroeconomic outlook — Millicom bolsters its regional scale, working money circulate resilience and long-term development prospects, the telco mentioned.
In Could, Telefonica reached an settlement to promote all the shares in its Uruguayan subsidiary to the Millicom Group for a complete of $440 million.
The transaction continues to be topic to sure closing circumstances, together with the approval of the corresponding regulatory authorizations.
Telefónica, which additionally operates beneath the Movistar model in Uruguay, is the nation’s second-largest cell operator, with almost 29% of the cell market by March 2025.
In March, Telefónica had additionally finalized an settlement to promote 67.5% of its Colombian unit Coltel— which it operates beneath the Movistar model — to Millicom for about roughly $416 million.
Along with buying Telefónica’s stake, Millicom had introduced a suggestion to buy the remaining 32.5% of Coltel, at the moment owned by the Colombian authorities and different buyers. If profitable, Millicom would achieve full management of the corporate.
In February, Telefonica introduced the sale of its Argentine subsidiary to rival Telecom Argentina for $1.245 billion as one other step within the firm’s efforts to scale back its footprint in Latin America.
The Argentine authorities initially introduced that it’ll examine the acquisition to find out whether or not it creates a monopoly. The Workplace of the President launched an announcement warning that “70% of telecommunications companies can be managed by a single financial group, making a monopoly shaped because of a long time of state advantages.”
In March, the Argentine authorities introduced a safety measure in search of to droop Telecom’s acquisition of Telefónica. The federal government mentioned that the suspension is predicated on the advice of the Nationwide Fee for the Protection of Competitors, which indicated that “the merger of each firms would considerably improve their market share.”
