Telefonica and Millicom International Cellular (MIC) are on a collision course over the latter company’s yet-to-conclude USD570 million takeover of Telefonica Costa Rica (Movistar). The transaction – part of a wider USD1.65 billion deal, which also included assets in Panama and Nicaragua – was agreed back in February 2019 and received regulatory approval from the Costa Rica’s Superintendency of Telecommunications (Superintendencia de Telecomunicaciones, Sutel) in September last year. Now, frustrated at the lack of progress, Telefonica has indicated that it will take legal action before the courts of the State of New York to ensure compliance; the claim will be filed as soon as is practicable.
For its part, Millicom hit back by saying: ‘Millicom International Cellular refutes Telefonica’s recent public communications alleging that the conditions to closing the Share Purchase Agreement (SPA) for the acquisition of Telefonica’s operating subsidiary in Costa Rica have been met. Millicom further notes that, in the event that the pending regulatory approvals for the transaction are not issued by 1 May 2020, it intends to terminate the SPA in accordance with the terms of the agreement … Millicom will vigorously defend any action brought by Telefonica in this matter.’
If/when the deal concludes it will represent the final piece of Millicom’s Central American jigsaw. The USD430 million Nicaraguan takeover closed in May 2019 and the USD650 million Panama deal concluded in August 2019. (Note: the acquisition is being carried out via Millicom’s local ISP unit, Millicom Cable Costa Rica, which trades as Tigo.)