America Movil (AM) and Liberty Latin America (LLA) have agreed to combine their respective Chilean operations, Claro Chile and VTR, to form a 50:50 joint venture (JV). The two parties have made a commitment to contribute businesses with net debt of CLP1.095 trillion (USD1.359 billion, LLA) and CLP259 billion (AM), respectively. In addition, LLA will make a balancing payment to AM of CLP73 billion. Neither LLA nor AM will consolidate the JV after the closing of the transaction. Further, the formation of the JV will not result in a change of control event for existing debtholders of VTR.
The transaction excludes all telecoms towers owned indirectly by AM in Chile. Further, Claro Chile owns a DTH satellite business which VTR would be unable to operate according to restrictions imposed by the Chilean Antitrust Courts, following its acquisition of Metropolis in 2005. If these restrictions remain in place at the time of completion, both parties have agreed to take every necessary step to comply with such restrictions. Completion of the deal is subject to certain customary closing conditions, including regulatory approvals, and is expected to close in the second half of 2022. The transaction is not subject to LLA or AM shareholder approvals.
The two companies expect the transaction ‘to create a business with greater scale, product diversification, and a capital structure that will enable significant investment for fixed fibre footprint expansion and to be at the forefront of 5G mobile delivery’. By 2025, the JV anticipates passing six million homes through its fixed network, with the majority of these homes having access to FTTH infrastructure.
According to TeleGeography’s GlobalComms Database, Claro Chile is the country’s third largest wireless player, serving more than five million mobile subscriptions. Claro also offers HFC, fibre and fixed-wireless broadband services. For its part, VTR is the country’s largest ISP by subscriptions and also operates an MVNO service.