Telefonica has completed the merger of its subsidiary Telefonica Moviles Colombia (Movistar) with the Colombian government-owned fixed-line operator Colombia Telecomunicaciones.
Telefonica owns 70% of the new company while the Colombian government holds…
Telefonica has completed the merger of its subsidiary Telefonica Moviles Colombia (Movistar) with the Colombian government-owned fixed-line operator Colombia Telecomunicaciones.
Telefonica owns 70% of the new company while the Colombian government holds the rest, with the option to increase its holding by 3% by 2015 depending on how the newly-merged operator performs.
Before the deal, Telefonica already held a 52% in stake in Colombia Telecomunicaciones, with the government owning the remainder.
Telefonica expects the deal to wipe €1.45bn (US1.8bn) from its net debts, €150m (US$190m) more than when the merger was first announced. The debt reduction is in part because the agreement will see the Colombian government move 48% of payment obligations not yet due by Colombia Telecomunicaciones to the PARAPAT pension fund.
In its first quarter results the Spanish telco reported debts of €57bn (US$72bn) and its credit ratings were downgraded subsequently. Telefonica recently announced a number of steps to reduce its leverage.