Millicom International Cellular has reached an agreement to acquire Telefonica‘s operations in Colombia for $400 million. The deal, which includes Telefonica’s 67.5% stake in Colombia Telecomunicaciones (Coltel), has been in the works for nearly eight months. While the purchase price was previously set, negotiations over details, including the acquisition of minority shareholder stakes, took time to finalize.
The final amount Millicom will pay is subject to adjustments, particularly regarding net debt, working capital, and foreign exchange fluctuations. Based on figures from September 2024, Millicom expects to pay $362 million, though this could change before the deal is officially closed. The transaction still requires regulatory approval, but Telefonica submitted the proposal to Colombia’s Superintendence of Industry and Commerce late last year, potentially expediting the process.
Millicom is positioning the acquisition as a boost to Colombia’s telecom sector, arguing that merging Coltel with its existing Tigo UNE business will create a financially stronger competitor capable of making critical investments in network infrastructure and digital expansion. However, the deal presents regulatory challenges. The combined entity would merge Colombia’s second and third-largest mobile operators, potentially reducing competition.
Currently, Claro, owned by America Movil, holds 45% of the market, while Telefonica and Millicom have 25% and 18%, respectively. With the merger, two companies would control nearly 90% of the market, raising concerns about reduced competition and potential impacts on consumers.
The Colombian government, which owns 32.5% of Coltel, is another key player in the deal. Millicom has offered to purchase these shares at the same price as Telefonica’s stake, though the acquisition could still proceed without them. Additionally, Millicom is looking to acquire the 50% of Tigo UNE it does not already own from the City of Medellín’s EPM, a long-running negotiation.
Regardless of the regulatory hurdles, Millicom is eager to expand its presence in Colombia, while Telefonica remains determined to exit the Latin American market.