Telefónica expects regulatory approval for Peru fiber deal this year

Telefónica expects regulatory approval for a Peruvian fiber deal during the second half, which, considering proceeds received from the stake in UK tower company CTIL, will help reduce debt by 7.4 billion euros (US$8bn).

Last year, the Peruvian units of Telefónica, Entel and global investment firm KKR announced an agreement under which the latter will acquire a majority interest in Telefónica-owned fiber company PangeaCo and the existing fiber optics networks of Telefónica del Perú and Entel Perú. 

The transaction is part of the Spanish operator's strategy to reduce its exposure in Spanish-speaking Latin America, or what the company calls the Hispam region.

The capex to revenue ratio in the region stood at 6.6% in the first half.

“We invest in different ways. In the case of fiber, this goes through the fiber costs. So we are addressing the best ultra-broadband technology in the region through those vehicles instead of doing it through capex,” CFO Laura Abasolo said during the Q2 investors call, referring to agreements such as the one with KKR and Entel.

Telefónica is also using shared fiber networks in Chile and Colombia. 

In the Hispam region, the company has 21.6 million homes passed with fiber, adding 3mn in the last 12 months, according to a press release. It reported 5.6mn fiber clients and 98.5mn mobile accesses in June.

The company also agreed to share mobile networks with Tigo in Colombia. “We are happy to share networks elsewhere in the region,” Abasolo said.

“Telefónica Hispam is making progress in achieving a greater rationality market, avoiding network overlap through different agreements on fiber and mobile,” she added.

Telefónica also signed an MOU with Millicom regarding the potential sale of the Colombia operation to the latter for US$400mn.

During Q2, service revenues grew 4.9% year-over-year.