Millicom buys Telefónica's remaining Central America assets

Millicom purchased Telefónica's business in Panama, Nicaragua and Costa Rica for US$1.7bn on late Wednesday, marking the exit of the Spanish company from the region after selling its operations in Guatemala and El Salvador to América Móvil, and setting the stage for a two-horse race in Central America.

Millicom said in a presentation that the purchase of the leading mobile player in the three countries "accelerates fixed-mobile convergence strategy, complementing our existing fixed portfolio with leading mobile asset," and "reinforces our leadership position in Central America, further diversifying our geographical presence and financial profile."

Telefónica owns 100% of Telefónica Costa Rica and 60% of the operations of Panama and Nicaragua, in which it is partnered with Guatemala-based regional player Corporación Multi Inversiones. The company said that the transaction is subjected to regulatory conditions in the three markets "and will occur in each case as those conditions are fulfilled."

The operation sets the stage for what will basically be a two-player market between Luxembourg-based Millicom, which operates under the brand Tigo in most of Latin America, and Mexico's ICT powerhouse América Móvil, with the two companies expanding their footprints to most of the region, with other regional players such as Liberty and Digicel limited to a few countries.

Telefónica said in a statement that the transaction "completes the sale of all of its Central American operations for an aggregate value of US$2.3bn." The operation, it added, will help the company on its strategy to reduce debt and strengthen its financial position.