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Telefonica purchase of ETB would leave Tigo stake in question

8 Mar 2010

BNamericas cites local newspaper Portafolio as saying that Telefonica’s potential purchase of Colombian telecoms operator ETB may have other market implications because ETB also owns 25% of mobile operator Tigo. In Colombia, Telefonica – which operates its mobile business under the Movistar brand – had 8.96 million subscribers at the end of 2009, while Tigo – controlled by Luxembourg-based mobile group Millicom International Cellular – ended the year with 4.19 million subscribers. While the combined 13.2 million subscriber base would leave the merged company a distant second from America Movil’s Comcel, which ended the year with 28.8 million subscribers, local law does not permit the common sharing of mobile licence concessions. As such, one of the two parties would have to turn over their concession to the ICT ministry, which would then hold another auction for the licence. The combined operations would also leave Telefonica with some four million fixed line subscribers and 1 million internet customers. The other possibility would be for Telefonica to sell its stake in Tigo, in which case the other two shareholders – UNE-EPM (with a 25% stake) and Millicom (with 50%) – would have the right of first refusal.

Local press previously reported that Telefonica may offer as much as EUR700 million (USD962 million) to acquire a controlling stake in ETB. The Bogota municipality currently holds 86.59% of ETB, while minority shareholders have the remainder. ETB needs a partner to bring in more capital in order to better compete in the increasingly competitive telecoms market. The telco plans to sell new shares, equivalent to a 36.6% stake. ETB reportedly expects to select its strategic partner in April.

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