Telefónica Móviles agrees USD1 billion deal for Chilean mobile unit

19 May 2004

Spanish mobile heavyweight Telefónica Móviles™ has agreed to purchase the mobile arm of Chile’s dominant telecoms services provider Telefónica CTC Chile for USD1 billion, to establish itself as the biggest wireless operator in Latin America. Under the deal the Madrid-based cellular operator, which is 92%-owned by Telefónica of Spain, will also assume USD243 million of debt in the cellco. TM plans to amalgamate its new purchase with BellSouth Corp’s Chilean division, which it is also acquiring as part of a bigger USD5.85 billion deal to buy all of BellSouth’s Latin American assets. The outcome of the wider plan will boost TM’s total subscriber base in the region by around 11.6 million to 44 million, roughly double that of its domestic mobile market. However, analysts agree that the sale is not so good for Telefónica CTC Chile, which is losing a fast growing unit and high revenue generator at a time when turnover in its traditional core voice market is in decline.