What does the future hold for Telefónica's remaining CentAm assets?

Spain's Telefónica is likely still in talks to sell the rest of its Central American assets after successfully offloading its Guatemala and El Salvador units to Mexican tycoon Carlos Slim's América Móvil, its main regional competitor, as the company continues its quest to reduce its heavy debt burden.

The company's remaining units in the region are Costa Rica, of which the Madrid-based company owns 100%, as well as Panama and Nicaragua, where Telefónica owns 60% of the operations and Guatemala's Corporación Multi Inversiones the remaining 40%.

A report in Spanish daily El Economista stated that the company is asking for 500mn euros (US$568mn) for the three operations, after netting US$648mn for the Guatemala and El Salvador units. The company is seeking to reduce its massive, 46.2bn-euro net debt, seen as a liability by analysts.

The main candidate to acquire the three units is Millicom, according to the report, while Liberty Latin America and even US giant AT&T could also be in the running.

Deury Pulgar, an auditing expert at Panamanian firm Auditaxes, said that Claro, América Móvil's regional brand, could buy Telefónica's operations in Panama to bolster both its customer network and its pay-TV presence after Tigo's acquisition of Cable Onda, reported website LatinFinance.

COSTA RICA PROBLEMS?

In Costa Rica, the transaction will give the potential buyer the second largest mobile telecommunications operator, with over 26% of the market, according to official data as of 2017. The country's leading operator, state-owned ICE, has over 50% of the market.

The country has 179% mobile penetration and Millicom does not currently operate a mobile unit in the country. Claro operates the third largest player in mobile, with around 21%.

The sale of Telefónica's Costa Rica assets might be influenced by the fact that the country is investigating the company for alleged tax fraud. The office of the public prosecutor raided its offices in the country in January looking for proof of a supposed fraudulent asset sale that is alleged to have allowed the company to avoid paying around US$2mn in taxes in 2017.