Costa Rican telecommunications regulator Sutel has formally rejected a proposed merger between two of the nation’s largest private operators, Liberty and Tigo.

The decision, which became public on Thursday, stalled a deal first unveiled in August 2024, when parent companies Liberty Latin America (LLA) and Millicom International Cellular announced an agreement to combine their Costa Rican operations.

Ticosland, a portal covering Costa Rican business news, says that the proposed structure would have created a dominant market force, with LLA slated to hold an approximate 86% stake in the joint entity, while Millicom would retain the remaining 14% share. It adds that this plan was positioned as a move to create a more robust, integrated service provider for Costa Rican consumers.

As for why the merger has been blocked, it may be about protecting consumers. Consolidation, as the would-be partners would no doubt suggest, could increase efficiency and innovation. However, while Sutel has not yet released the specific rationale behind its decision, the apparent involvement of the country’s competition commission Coprocom could indicate concerns with the potential risks of a concentrated market, such as price hikes and a reduction in service quality or choices, implying that antitrust considerations are at the core of the rejection. Kölbi, a state-owned carrier, would be the only significant competition after the merger.

However, this saga may not over yet. Liberty Costa Rica’s official statement apparently suggests that it had worked closely with the regulator for several months to design adequate solutions that would address any competition concerns.

It also seems that Liberty was informed of Sutel’s initial negative decision in September but, along with Tigo, filed a formal appeal in late October, challenging the regulator’s findings. This means that both companies are now awaiting a final verdict on their appeal.