Telefonica Agrees To Sell Colombian Fiber Stake to KKR

Telefonica SA agreed to sell a stake in its Colombian fiber optic broadband network to KKR & Co.

Telefonica will control 40% of the new venture, which will aim to bring high-speed internet access to about 90 cities in the next three years, and KKR the remaining 60%, the carrier said in a statement late Friday.

The venture is valued at $500 million, or 20 times operating income before depreciation and amortization, Telefonica said. The sale will reduce Telefonica’s net debt by 200 million euros ($236 million), the company said.

“The agreement with KKR will accelerate the deployment of fiber-optics in Colombia at an unprecedented rate, in a market that has shown enormous potential in the last year,” Alfonso Gomez Palacio, chief executive officer of Telefonica’s Latin American business, said in the statement.

The move will also contribute to the Colombian government’s goals to bring Internet access to more than 70% of households by 2022.

This is Telefonica’s fourth fiber deal since last year, as it seeks both to raise funds and modify its capital allocation. Earlier this year, it announced a similar deal with KKR in Chile and it also formed a joint venture with a Canadian pension fund in Brazil to develop a wholesale fiber network. Last year, the carrier formed a joint venture with Allianz SE in Germany to build a wholesale fiber operator.

The Colombian transaction also follows the sale of telecommunication masts to American Tower Corp. in January, which marked a major milestone in the recovery of the Spanish company.

Banco Santander SA advised Telefonica.

©2021 Bloomberg L.P.

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