Telefonica makes changes on the lawsuit against Millicom for Movistar Costa Rica’s sale

Spanish economic newspaper ‘Cinco Dias’ reported this last Monday, March 1st, on its official web version that Telefonica made changes on the lawsuit it has filed against Millicom (Tigo) for the acquisition of Movistar’s operations in Costa Rica. 

According to the information reported by ‘Cinco Dias’, the Spanish company reported as part of its its annual financial report that in August 2020 it made changes on the lawsuit, ‘removing the requirement to fulfill the terms of the sale agreement, and requesting only a compensation for all the damages that the unjustified breach could cause Telefonica’.

At the end of April 2020, Telefonica -whose operations in Latin America are branded as ‘Movistar’ – announced its decision to sue Millicom for not fulfilling the terms of the agreement to acquire Movistar’s operations in Costa Rica. In a notification sent to the Spanish National Securities Market Commission (CNMV), Telefonica announced that it would go to the New York’s Curt to force Millicom to fulfill the terms of the agreement, which had originally been reached on February 20th, 2019, for the sale of all the capital stock of Telefonica in Costa Rica. The original agreement between Telefonica and Millicom is valued at USD 570 million.

After the announcement, in May, Telefonica filed a lawsuit against Millicom in the Court of New York, since it considered that Millicom had breached the terms and conditions established in the acquisition agreement, and in which it requires the company to fulfill them  and compensatie Telefonica for damages that not fulfilling the agreement could cause the Spanish company.

At the end of July 2020, Telefonica announced a new agreement with Liberty Latin America to acquire Movistar’s operations in Costa Rica, valued at USD 500 million. The transaction is expected to conclude during the first half of 2021. Apart from that, during the first months of 2019, Telefonica agreed with America Movil for the sale of Movistar El Salvador, although the transaction was canceled in September last year after the Superintendencia de la Competencia, regulatory entity in El Salvador, established a series of prerequisites and the companies decided not to go ahead with the process. In addition, Telefonica also sold its operations in Panama and Nicaragua to Millicom and in Guatemala to America Móvil.