The prospective merger between Millicom-controlled Tigo Colombia and state-owned UNE EPM could reportedly lead to spectrum divestments or a change to the country’s rules.
The resulting operator would have 135 MHz of spectrum in the bands above 1…
The prospective merger between Millicom-controlled Tigo Colombia and state-owned UNE EPM could reportedly lead to spectrum divestments or a change to the country’s rules.
The resulting operator would have 135 MHz of spectrum in the bands above 1 GHz but Colombia’s spectrum agency limits telcos’ spectrum to 85 MHz.
However, according to local newspaper El Universal, the government could decide to change the rules to accommodate the Tigo/UNE EPM tie-up.
The newspaper quoted Oscar Leon, president of the country’s spectrum agency ANE’s, as saying that the worst-case scenario for Tigo/UNE EPM would be that some spectrum would have to be returned to the government. But he also suggested that the spectrum cap could be increased to allow operators to hold more licences.
Speaking to TelecomFinance, Informa analyst Ari Lopes expanded on the options available: “First, ANE can use the 700 MHz auction, probably to take place in 2014, to raise the spectrum limit per operator … If they cannot wait until them, Colombian authorities can simply raise the limit before that new auction.”
Lopes also pointed out that the government has a 30MHz block of unsold spectrum, which it could sell to another player to redress the balance.
He said that while these were viable alternative options, ANE may still require the merged operator to return spectrum to the government.
Politicians in Colombia want more competition and have moved against market-leading America Movil subsidiary Claro, which has more than half of the wireless market sewn up. In the country’s latest 4G auction at the end of June, the Mexican-owned operator was restricted from bidding for certain licences as authorities imposed asymmetric regulation.
America Movil dominates the country’s mobile market with 62% of customers, according to data published in March by the government’s communications department Mintic. Telefonica has 24%, Tigo 13.5% and the remaining 0.5% is split between smaller operators including UNE EPM.
While predominantly a triple play operator, UNE EPM purchased 50 MHz of 2.5 GHz spectrum in 2010 and now has 85,000 LTE mobile broadband subscribers after launching services a year ago.
In late June Tigo spent US$102m on 30 MHz of 1.7/2.1 GHz licences to add to its 55 GHz of 1.9 GHz, which took it to the 85MHz cap.
Regulatory approvals mean that Millicom estimates the merger, agreed earlier this week, will close between Q4 this year and Q1 next year.
The tie-up will form a telco with US$2bn revenue and EBITDA of US$531m based on last year’s figures recorded by the units. Synergies of more than US$600m will also be created, Millicom said.
