Millicom’s wireless subsidiary Tigo Colombia is set to merge with local fixed-line player UNE EPM, a division of state-owned utility EPM, after the parties reached an agreement in principal.
EPM will hold 50% plus one share of the combined telco,…
Millicom’s wireless subsidiary Tigo Colombia is set to merge with local fixed-line player UNE EPM, a division of state-owned utility EPM, after the parties reached an agreement in principal.
EPM will hold 50% plus one share of the combined telco, while Millicom will own the rest, assume operational and administrative control, and fully consolidate the integrated entity from closing.
Millicom said as a result its net debt would rise by US$1.1bn and give it a net debt/EBITDA ratio of 1.5x.
Millicom estimated that a definitive transaction document would be executed by the end of Q3 and that the deal should be completed by the end of Q1 2014, subject to regulatory and bondholder approval.
The combined company would have generated US$2bn revenues last year on a pro forma basis, and achieved EBITDA of US$531m. The merger is expected to create synergies of more than US$600m.
The transaction gives UNE an enterprise value of US$2.1bn and Tigo an enterprise value of US$1.3bn.
Millicom said the deal fits with its strategy of pursuing convergence between wireless and fixed-line services.
Millicom president and CEO Hans-Holger Albrecht commented: “Millicom has enjoyed a great relationship with EPM as partners in Tigo Colombia for many years … We look forward to working with EPM and UNE to complete this transaction and, if the regulatory process allows, begin the integration of our and UNE’s services so we can get on with the business of providing a highly attractive and innovative service to the people of Colombia.”
Millicom had entered negotiations with EPM in early January regarding a possible merger. In May a significant approval was won after the council of the Colombian city of Medellin voted 11 to nine in favour of changing the ownership structure of UNE to pave the way for a merger. EPM is owned by the city.
UNE, which offers cable TV and fixed-line services, already has a 25% stake in Tigo, which Millicom owns 50% plus one share of. EPM owns 99.9% of UNE.
