Liberty to Mull Purchase of Telefonica Latin America Units

15 Dec 2020, 09:57 PM IST

(Bloomberg) -- Liberty Latin America Ltd., the regional operator backed by billionaire John Malone, is considering an acquisition of Telefonica SA’s businesses in Colombia and Ecuador, people with knowledge of the matter said.

The telecommunications companies have held talks over a potential deal, the people said, asking not to be identified discussing confidential information.

Telefonica Colombia reported 558 million euros ($678 million) of operating income before depreciation and amortization last year, while the Ecuador unit generated 193 million euros, according to company filings. Deliberations are ongoing, and there’s no certainty they will result in a transaction, the people said.

Liberty Latin America has been expanding through acquisitions, agreeing last year to spend nearly $2 billion for AT&T Inc.’s operations in Puerto Rico and the U.S. Virgin Islands. In July, it reached a deal to purchase Telefonica’s Costa Rican unit for about $500 million including debt.

One hurdle to a transaction in Colombia would be the Telefonica unit’s ownership structure, since the local government holds a stake, the people said. Other suitors have also expressed interest in some of Telefonica’s operations in the region, the people said.

Representatives for Telefonica and Liberty Latin America declined to comment.

Telefonica was down 1.13% to 3.49 euros per share at 9:09 a.m. in Madrid. The stock is down 44% in 2020. Liberty Latin America rose 1.49% in New York on Monday.

Chief Executive Officer Jose Maria Alvarez-Pallete has been working to reduce Telefonica’s Latin American presence and focus on core markets in Spain, the U.K., Germany and Brazil. The new plan reverses the previous three decades of strategy, during which Telefonica prided itself on being a major provider in the region.

On Tuesday, Brazilian carrier Oi SA announced it was selling its mobile unit to a consortium formed by the local subsidiaries of Telefonica SA, Telecom Italia SpAand America Movil SAB.

Liberty Latin America already operates in Colombia and has units in Chile, the Caribbean and parts of Central America, according to its website. Malone has also been striking deals in other parts of the world, with Liberty Global Plc and Telefonica agreeing in May to merge their U.K. units to create the country’s biggest phone and internet provider.