VTR begins move towards full MVNO status

21 Aug 2013

US-based telecoms group Liberty Global Inc (LGI) is considering ‘strategic alternatives’ for the mobile operations of its Chilean unit, VTR, that would likely see the provider sell off its mobile network assets in favour of expanded mobile virtual network operator (MVNO) agreements. In a filing with the US securities and exchange commission (SEC), LGI noted that: ‘Although the framework and economics of any transition to expanded MVNO arrangements are still under review, we currently expect that we will cease use of VTR Wireless’ mobile network during the fourth quarter of 2013.’ LGI booked a depreciation expense of USD42.4 million in Q2 2013 to reflect the reduction in useful life of VTR’s network equipment, adding that at the end of June 2013 the net value of the tower assets was USD64.6 million, although the remaining payments due under VTR’s tower and real estate leases totalled USD112.5 million. Further commenting on the financial implications of the transition, LGI added: ‘The amount of any restructuring charge that we may be required to record if we were to cease use of the towers and real estate underlying the operating leases will be dependent on a number of factors, including whether and to what extent these leases are assumed by, or subleased to, third parties.’ LGI did not comment on the motivation behind the plans, and earlier this month LGI CFO Bernard Dvorak claimed that VTR’s mobile business was ‘not a drag’ on the telco’s operating cash flow.

Chile, Liberty Global (incl. LGI), VTR