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The formation of the joint venture had been under discussion for over a year
Telefónica’s proposed sale of its Peruvian fibre optic network to private equity firm KKR and Chilean telecom operator Entel has collapsed, representing a major setback in the Spanish telecom giant’s efforts to streamline operations and reduce debt.
The deal, announced in July last year, would have seen KKR and Entel acquire a 54% and 10% stake in the network, respectively, valuing the business at approximately €550 million, including debt, according to reports. The newly created joint venture, dubbed On Net Fibra de Peru, would become Peru’s first open first independent open access wholesale fiber optic network, with KKR aiming to more than double the network’s coverage to 5.2 million by the end of 2026.
The deal was cleared by the Peruvian competition regulator in September, leaving the way seemingly clear for the deal to go ahead.
Last week, however, Entel disclosed the breakdown of negotiations in a Peruvian regulatory filing, citing unfulfilled closing conditions.
“Pangea has communicated that, due to the failure to comply with certain closing conditions stipulated in the SSA (in reference to the agreement), related to a parallel transaction between KKR and Telefónica Hispam regarding Pangea that will not materialize, Telefónica Hispam has expressed its intention to formally document the termination of the SSA. To date, the parties to the SSA are in discussions regarding the terms and conditions of said termination,” explained Entel in a statement.
Telefonica had planned to use the sale proceeds to cut its debt by €200 million, aligning with its broader strategy to divest non-core assets and focus on key markets like Spain, Brazil, and Germany.
Telefónica has been actively selling off assets in recent years, including its tower businesses and shares in fibre ventures across Europe and Latin America. These moves are aimed at tackling its €26 billion debt burden and free up capital to investment in 5G and digital infrastructure in key markets.
KKR has a history of investments in critical telecom infrastructure – including most recently in Telecom Italia – has partnered with Telefónica in other fibre-related ventures, including acquiring its Chilean wholesale fibre optic network in 2021.
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