AM pays Colombia fine ‘under protest’; Telefonica agrees capital increase to cover fine

30 Aug 2017

America Movil (AM) has confirmed that its Colombian subsidiary Comunicacion Celular (Comcel) has fulfilled, under protest – and reserving all of its rights and those of its shareholders – the payment obligation initiated by the Ministry of Information and Communications (Ministerio de Tecnologias de la Informacion y las Comunicaciones de Colombia, MinTIC) against Comcel last month. The COP3.16 trillion (USD1.07 billion) fine relates to ‘concession agreements, providing for the reversion of wireless telecommunication assets related to the provision of services operated by Comcel until 2013’; under the terms of their original 1994 licences, Comcel – and rival Telefonica Colombia – were required to return wireless network infrastructure to the state after a ten-year period, which was subsequently extended for a further ten years. The Mexican-owned telco says that it is challenging the arbitral award in accordance with Colombian legislation, and intends to exhaust every national and international available legal action to do so.

In a related development, the shareholders of Telefonica Colombia, which is 67.5% owned by Telefonica of Spain and 32.5% owned by the Colombian government, have agreed to a capital increase of approximately EUR1.37 billion (USD1.64 billion) to pre-pay all commitments in relation to PARAPAT, the consortium that owns the telecommunications assets and manages the pension funds of the former companies that resulted in Colombia Telecomunicaciones (Telefonica Colombia). With regard to the aforementioned arbitration award the telco’s partners have approved an additional capital increase of EUR472 million to cover the full payment of the award. Telefonica will contribute EUR318 million of the total. Telefonica clarifies that the execution of the payment does not imply that it agrees with the content of the arbitration award, and reserves all of its legal rights and the exercise of any applicable legal action, national or international.