Liberty Latin America terminates Millicom talks

Cable, fixed telecom and mobile operator Liberty Latin America has terminated its talks with regional telco Millicom about a potential purchase of the operator.

In a brief statement, Liberty Latin America said it “remains focused on its growth strategy to deliver value for shareholders and provide market leading products and services to its customers”.

Millicom said that the preliminary discussions had been terminated by Liberty “without an offer being made”.

The announcement comes barely a week after Millicom revealed that it had been approached by the John Malone-backed Liberty Latin America about a potential acquisition of 100% of its shares.

Bloomberg reported yesterday that Liberty was struggling to win over Millicom management over support for a bid that valued the company at about US$7.6 billion, citing unnamed sources.

According to Bloomberg, Liberty and Millicom executives were scheduled to meet in the coming days to discuss a half-cash, half stock offer that valued the Stockholm-listed Millicom at SEK710 a share. The report said that leading Millicom shareholder Kinnevik supported the proposal but company management were reluctant to support it, preferring to hold out for a higher bid and a bigger cash element.

Bloomberg also reported that Millicom management were concerned about Liberty’s high level of debt and the downward direction of travel of the company’s stock price.

Millicom operates subsidiaries and JVs providing mobile services to about 51 million customers, with a cable footprint of about nine million homes, while Liberty Latin America operates in 21 consumer markets and 30 B2B markets, with 5.3 million revenue generating units based on 6.6 million homes passed with its fixed network and 3.5 million mobile customers.

A combination of the pair would have created one of the largest telcos in Latin America, with the ability to compete with the likes of América Móvil and Telefónica.

In other Lat Am telco news, Telefónica has told Spanish regulator the CNMV that it is in talks around the sale of its central American assets, potentially resulting in the total or partial sale of its units in the region.

According to Spanish financial daily Expansión, Telefónica is close to agreeing a sale of its units in El Salvador and Guatemala to América Móvil, while a sale of its Costa Rica, Nicaragua and Panama operations likely to follow later, with Millicom identified as the most likely buyer.