Sutel allows Movistar and Cabletica’s concentration in Costa Rica

The Costa Rican Superintendencia de Telecomunicaciones (Sutel), entity in charge of regulating the telecommunications market in the country, has officially announced that it has allowed the Cabletica company (Liberty Latin America) to acquire 100% of Telefonica’s operations in Costa Rica , where Telefonica operates under the ‘Movistar’ brand. A technical analysis based on the transaction was implemented, and determined that the concentration between both companies ‘does not create negative effects or affect healthy competition’ in the country.

Sutel plans to send a report approving the merger between Cabletica and Movistar to the Costa Rican Science, Technology and Telecommunications Ministry (Micitt) in the coming days, so that the county’s Government  is able to solve the matter concerning the operation.

Federico Chacon, Sutel Board’s President, reported that the Costa Rican entity ‘must  ensure the interest of users and guarantee the continuity and quality of the service to Movistar clients, who could become Cabletica’s clients when the transaction takes place’. The executive also reported that Cabletica ‘must keep (Movistar’s) users the same quality and price conditions agreed in the agreements that the company’s clients have available’.

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.