Telefónica to sell Costa Rica, Panama and Nicaragua units to Millicom

25 February 2019 | Natalie Bannerman

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Telefónica has entered into an agreement with Millicom for the sale of partial and whole parts of Telefónica Costa Rica, Panama and Nicaragua.

Specifically the deal is for the entire share capital of Telefónica de Costa Rica, as well as the entire share capital of Telefónica Móviles Panamá (60% of which is owned by Telefonica and 40% that is owned by Corporación Multi Inversiones) and the sale of Telefónica Celular de Nicaragua.

The value of the deal has been estimated at approximately €1.4 billion, €503 million for Telefónica Costa Rica, €573 million for Telefónica Panama and €379 million for Telefónica Nicaragua. This figures translates to 6.7 times the estimated 2018 Earnings before interest, tax, depreciation and amortization (EBITDA) of the three companies combined.

The deal is expected to create capital gains before taxes and minorities of approximately €800 million.

The news follows Telefónica’s decision to its business units in Guatemala and El Salvador to América Móvil for €570 million.

Both sets of deals completes the sale of Telefónica’s entire Central American operations close to €2 billion, with a joint value of 7.4 times the estimated Operating Income Before Depreciation and Amortization (OIBDA) 2018 of all companies and with an estimated debt reduction of approximately €1,4 billion.

 This sale as with the previous one is based on Telefónica’s goal organically reducing its debt and strengthening its balance sheet “in a growing cash flow scenario” enabling it to deliver an attractive remuneration package to its shareholders.

The company also says that it the decision underpins its strategy of value creation “improving return on capital and strategic positioning.”