Thursday 9 February 2023

US company announces purchase of Telefónica (Movistar) in Costa Rica

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8 February 2023 - At The Banks - BCCR

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(QCOSTARICA) Liberty Latin America announced the signing of a definitive agreement for the purchase of the operations of the Spanish company Telefónica (operating under the Movistar brand) in Costa Rica.

Telefonica’s Movistar is housed in Escazu Costa Rica. This is the second time in a year that Telefonica has tried selling the brand in Costa Rica.

The information was released by the company in a statement this Thursday, July 30.

The cash transaction totals US$500 million dollars and is subject to certain customary closing conditions, including regulatory approvals. Liberty says it plans to close the deal in the first half of 2021.

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Liberty Latin America is part of the multinational Liberty Global with headquarters in London (England), Amsterdam (Holland), and Denver (United States).

“We have had great success in Costa Rica through our 2018 investment in Cabletica, owned by 80%, a leading fixed provider in the country and one of the fastest-growing businesses in Latin America,” announced Balan Nair, president and executive director of Liberty Latin America in the statement.

“We are excited to increase our investment in the country,” added the businessman.

According to him, in his opinion, Telefónica Costa Rica has provided a solid financial performance, “including high growth of the single-digit upper line.”

The company had purchased 80% of Cabletica from Televisora ​​de Costa Rica, owner of local television Channel 7, in February 2018. The remaining 20% ​​of the company remains in the hands of the current owners of the television station.

In combination with Cabletica, Nair announced that they hoped to create “a leading player in integrated communications that offers customers in Costa Rica high-quality value and unmatched customer service.”

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The businessman also announced that Liberty Latin America intends for Telefónica Costa Rica to become part of the VTR credit group, which will also include Cabletica. VTR is a Chilean telecommunications company also owned by Liberty Latin America since 2014.

Millicom backs out

This is the second attempt by Telefonica to sell its Costa Rica operations. In 2019, Millicom struck a deal with Telefonica for US$570 million dollars to purchase the Costa Rica operations.

On May 1 of this year, Millicom backed out of the deal.

Millicom cited an important drop in revenue due to the COVID-19 pandemic as the reason for pulling out of the deal. Telefónica, for its part, had said that it would file a lawsuit against Millicom in a court in New York.

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Despite the new deal, Telefónica stressed this Thursday that it maintains the legal claim against Millicom. “Telefónica underlines that it maintains the legal action initiated against Millicom last May for unjustified breach of the terms of the agreement reached in 2019 and will demand compensation for all damages that such breach has caused to the company,” said the Spanish in a statement.

Telefónica Costa Rica is the second largest provider of mobile services in Costa Rica, behind the Instituto Costarricense de Electricidad (ICE) with its Kolbi brand.

As of June 30, 2020, Telefónica’s Movistar brand in Costa Rica had some 2.3 million active cell lines and its mobile network currently has approximately 90% coverage on the LTE (4G) network.

Who is Liberty Latin America?

Liberty Latin America, founded in 2017 and headquartered in Denver, Colorado, is a leading telecommunications company operating in over 20 countries across Latin America and the Caribbean under the consumer brands VTR, Flow, Liberty, Más Móvil, BTC and Cabletica (in Costa Rica).

In November 2015, Liberty Global announced its acquisition of Cable & Wireless Communications for US$5.3 billion and thus expanded Liberty Global’s presence in the Caribbean and Latin America.

In January 2018, Liberty Latin America (NASDAQ:LILA) spun off the main company and began operating independently from Liberty Global.

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