Telefonica, one of the largest telecommunications service providers in the world, has announced the sale of its El Salvadorean unit.
The company’s subsidiary, Telefonica Centroamerica Inversiones, a company owned, directly and indirectly, 60 percent by Telefonica and 40 percent by Corporacion Multi Inversiones, has reached an agreement with General International Telecom Limited for the sale of all the capital stock of Telefonica Moviles el Salvador, of which it is the owner.
According to website Cinco Dias, General International Telecom Limited is comprised of a group of Salvadorean investors, who are backed by the Atlantida bank.
The price of the transaction is $144 million, said to be approximately seven times the unit’s operating income before depreciation and amortisation in 2020.
The transaction will not be formally closed until a number of conditions, including regulatory approvals, are met. While this is often a formality, readers will be aware that in late 2020 America Movil cancelled an agreement to acquire 99.3 per cent of Telefonica units in El Salvador, blaming the collapse on regulatory demands.
As Reuters points out, the sale is part of a wider Telefonica plan to reduce its debt by selling assets. It’s also part of Telefonica's strategy to reduce its exposure to risk in Latin America.
We reported in late 2019 that four core markets – the UK, Spain, Germany and Brazil – were to be prioritised by Telefonica. At the time it was announced that the Latin American businesses (except Brazil) were to be spun off into a single unit or sold.