Costa Rican President allows Liberty Latin America to acquire Telefonica’s operations in the country

Telecommunications companies Liberty Latin America and Telefonica have officially announced this last Monday, August 2nd that Costa Rican President, Carlos Alvarado Quesada, has allowed  the sale of Telefonica’s operations in the country -where they are known as ‘Movistar’- to Liberty Latin America’s 80% subsidiary, Cabletica. Both companies expect the transaction to be closed in mid-August.

The transaction was announced last year, and, at the end of March, the Costa Rican Superintendencia de Telecomunicaciones (Sutel), entity in charge of regulating the telecommunications market in the country, determined that there was no evidence the transaction would produce any anti-competitive effects, and approved the transaction without conditions.

Telefónica has been developing a plan to exit itself from most of the markets where it is operating in Latin America. In 2020, the Millicom company (which operates in Latin America under the ‘Tigo’ brand), tried to acquire Movistar’s operations in Costa Rica. However, before finalizing the transaction, Telefonica decided to sue Millicom for not having fulfilled the original terms of the agreement. During the last days of July 2020, Telefonica announced a new agreement for the sale of its operations in Costa Rica, this time with Liberty Latin America, which is valued at USD 500 million.

At the end of November 2019, Jose Maria Alvarez-Pallete, Chairman & CEO at Telefonica, announced a plan to sell the company’s subsidiaries in Hispanic America (Latin America, excluding Brazil), and focus the company’s business in Brazil, Spain, UK and Germany.  Movistar has already made progress with the sale of its subsidiaries in Costa Rica to Liberty Latin America, Nicaragua and Panama to Millicom; and Guatemala and El Salvador to America Movil. Last year, the sale of Movistar El Salvador to America Movil was rejected, after both companies decided not to go ahead with the transaction. In addition, in December 2020, several specialized websites reported that Liberty Latin America also intends to acquire Movistar’s subsidiaries in Colombia and Ecuador. Added to these announcements is the acquisition of DirecTV’s fixed internet business by Movistar in Colombia; as well as the hiring of a former Telefonica executive by the Argentine holding company Grupo Olmos, who intends to acquire Movistar’s operations in Uruguay.