Spanish incumbent Telefonica has agreed with the Colombian government to merge fixed-line operator Colombia Telecomunicaciones and Telefonica’s wholly-owned local subsidiary, mobile operator Telefonica Moviles Colombia.
The deal will see…
Spanish incumbent Telefonica has agreed with the Colombian government to merge fixed-line operator Colombia Telecomunicaciones and Telefonica’s wholly-owned local subsidiary, mobile operator Telefonica Moviles Colombia.
The deal will see Telefonica’s net financial debt cut by €1.3bn (US$1.7bn).
Telefonica currently holds a 52% stake in Colombia Telecomunicaciones, with the government holding the rest.
Telefonica said that once the merger is completed, it will own 70% of the combined company. The government will retain a 30% stake, with the option to increase this by 3% by 2015, depending on the merged company’s operating performance.
The deal, which is still subject to regulatory and shareholder approval, will create the second largest integrated operator in Colombia, Telefonica said.
The shareholder meetings of both the Colombian companies will take place on 24 April.
As part of the agreement, the government is going to move 48% of payment obligations not yet due by Colombia Telecomunicaciones to the PARAPAT pension fund.
As a result of this and other measures, Telefonica expects its net financial debt to fall by €1.3bn. The Spanish incumbent reported net financial debt of €56.3bn (US$73bn) in 2011.
Telefonica has moved to reduce its debt through measures like a cut to its planned dividend and sales of non-core assets.
Spanish infrastructure group Abertis announced today that it had agreed to buy 500 Spanish towers from Telefonica for €45m.
