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The sale to NJJ and Millicom marks the latest step in Telefonica’s Latin American retreat
This week, Telefonica has announced it has sold its Chilean mobile unit to Millicom and NJJ, a pair of companies both owned by French billionaire Xavier Niel.
The deal, valued at $1.2 billion, will see NJJ take a 51% of the business and Millicom a 49% stake. Despite holding the smaller stake, Millicom will operate the business on a day-to-day basis.
“This gives NJJ and Millicom operational control from day one and the ability to capture long-term growth potential at an attractive valuation, without compromising our financial strength,” Millicom Chief Executive Officer Marcelo Benítez said in the statement.
Telefonica will receive an initial payment of $50 million, with $340 million deferred. Telefonica canTelefonica makes $1.2bn exit from Chile also earn up to a further $150 million based on the unit’s future performance.
Both Millicom and NJJ will also have the right to purchase the other’s stake after five and six years have passed, with Millicom’s option taking priority.
Telefonica has been divesting of its Latin American businesses since 2019, when the company changed its strategy to focus on its core markets of Spain, Germany, Brazil, and the UK.
The sale of these units has accelerated under CEO Marc Murtra, who took over the role at the start of January and quickly oversaw exits from Argentina, Peru, and Colombia.
Discussions over Telefonica’s Chilean unit had been underway since at least in May last year, with America Movil, WOM, and Entel also displaying interest in the business.
Millicom, on the other hand, is expanding its regional footprint and has already proven a keen buyer of Telefonica’s struggling businesses.
In the past two years, Millicom has snapped up Telefonica’s operations in Colombia, Ecuador, and Uruguay for a combined total of over $1 billion.
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