Tuesday 26 October 2021

The Implications in Costa Rica Of A Liberty Latin America and Millicom Merger

Although it would be a global merger, Liberty must request the approval of the merger from the local authorities in Costa Rica

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Costa Rica’s cable television, IP telephony, and cellular phone market could be concentrated in the hands of a few with the recent news of a possible merger between Liberty Latin America, that recently purchased a major stake in Cabletica and Millicom, which operates in Costa Rica under the Tigo brand.

Although it would be a global merger, Liberty must request the approval of the merger from the local authorities in Costa Rica

Although the merger, if one occurs, is global, both companies require the approval of the Superintendencia de Telecomunicaciones (Sutel) – Costa Rica’s telecom regulator and the Comisión de Promoción de la Competencia (Coprocom) – competition commission.

The objective of the Sutel and Corpcom is preventing market dominance and protect consumers.

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On January 14, Liberty Latin America confirmed that it is in preliminary negotiations with Millicom International Cellular for a possible transaction. The firm clarified that the talks between both parties could reach an agreement. Or they could end in nothing.

In Costa Rica, such a merger would imply that the new operator would have substantial power in the domestic market, given that Cabletica and Tigo are the operators with a strong presence especially in Internet and cable television.

Sutel’s data (from 2015, the latest published) reveals that Cabletica and Tigo had a 39% share of fixed Internet subscribers. In 2017, the two companies accounted for 68% of cable television.

Tigo also offers satellite television service, dominating over the competition Claro, Movistar, and Sky.

In IP telephony, Cabletica and Tigo dominated the segment with 54% of customers at the end of 2017.

Liberty’s presence in the region

In 2018 Liberty Latin America acquired 80% of Cabletica (the remaining 20% remains in the hands of Televisora de Costa Rica), a purchase that was announced in February of that year and approved by regulatory authorities last June.

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In 2014, Liberty Global purchased Cable & Wireless (C&W), which includes mobile telephony services in several markets including Panama. In Costa Rica C&W only offers services at the corporate level.

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