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Telefonica looking to sell Central American stakes for €530 million

Telefonica looking to sell Central American stakes for €530 million

Telefonica is seeking to bring in as much as €530 million by selling off majority stakes in two of its Movistar units in Central America.

El Economista reported that America Movil is the frontrunner to acquire the El Salvador and Guatemala units of Movistar, although it will have significant regulatory hurdles to clear in both markets.

America Movil’s Claro is the second largest operator in Guatemala, with Telefonica’s Movistar taking third place. If combined, the merged entity would be a comfortable second of three operators, but Millicom’s Tigo would still take first place with its market share of over 50%.

However, a merger between the El Salvador units of Claro and Movistar would create a new market leader with over half of the country’s subscribers. This would overtake Millicom’s local unit and reduce the number of operators from five to four.

Telefonica is reportedly keen to sell some or all of its Central American operations to reduce its debt. As well as El Salvador and Guatemala, the group is present in Costa Rica, Nicaragua and Panama. It holds a 60% stake in all of its Central American units apart from its operations in Costa Rica, which it owns in full.

The operator’s net debt totalled around €42.6 billion at the end of September 2018, but by realigning its strategy it has since managed to reduce this figure at a consistent rate. The news of a potential sale to America Movil follow the recent announcement that Liberty Latin America has put in an offer to acquire Millicom.

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