Is there a new buyer for Telefonica’s Costa Rican business?

Is there a new buyer for Telefonica’s Costa Rican business?

Another long-running takeover saga, this time in Costa Rica, has seen a new development.

As regular readers will remember, Telefonica, which owns a Costa Rican mobile business, agreed to a $1.65 billion deal in February 2019 that would have seen Millicom take over several of Telefonica’s Latin American operations, including units in Nicaragua and Panama. The Costa Rican business was part of that deal. Indeed Costa Rican regulator Sutel cleared Millicom’s $570 million acquisition of Telefonica’s local unit in September 2019.

However, Millicom terminated its share purchase agreement to acquire Telefonica’s Costa Rican unit, in accordance with the terms of the original deal, when additional regulatory approvals were required but apparently not received by a deadline of 1 May 2020.

Now the regional press has suggested that Telefonica has found a new buyer for its mobile business in Costa Rica after the collapse of the deal with Millicom.

The partner remains unnamed but reports suggest that negotiations have reached the point where Telefonica has begun due diligence processes to produce necessary data for the buyer.

Names such as America Movil, AT&T and Liberty Global have been suggested as likely candidates. If America Movil turns out to be the buyer that would reduce the mobile market to two players as America Movil already owns the Claro-branded Costa Rican operator. However, there may be some way to go yet as any bid could face regulatory challenges.

Either way, state-owned operator Instituto Costarricense de Electricidad (ICE), which has over 50 per cent of the market, would remain the market leader.