Millicom acquires Telefónica’s operations in Panama, Costa Rica and Nicaragua

Wednesday, February 20th, 2019
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Millicom adds mobile to its cable footprint with acquisition of Telefónica’s operations in Panama, Costa Rica and Nicaragua

  • Millicom is paying $1.65 billion to acquire leading mobile assets that complement Millicom’s cable operations in Panama, Costa Rica, and Nicaragua.
  • Upon completion, Millicom will have cable and mobile in all of the Latam markets where it operates, consistent with the company’s fixed-mobile convergence strategy.
  • The transaction solidifies Millicom’s leadership position in Central America and further diversifies and balances Millicom’s geographical footprint.
  • The aggregate purchase price implies a multiple of 6.8x 2018 Combined Adjusted EBITDA (*1) and 10.1x Combined OCF (Adjusted EBITDA less capex).
  • Significant expected annual opex and capex synergies, implying post-synergy valuation multiples of 5.8x Adjusted EBITDA and 8.3x OCF.
  • Completion is anticipated in H2 2019, subject to regulatory approvals.

LUXEMBOURG — Millicom International Cellular S.A. (“Millicom” or “the Company”) announced today it has entered into agreements with Telefónica S.A. and certain of its affiliates (“Telefonica”), to acquire the entire share capital of Telefónica Móviles Panamá, S.A., Telefónica de Costa Rica TC, S.A. (and its wholly owned subsidiary, Telefónica Gestión de Infraestructura y Sistemas de Costa Rica, S.A.) and Telefonía Celular de Nicaragua, S.A. (together, “Telefonica CAM”) for a combined enterprise value of $1,650 million (the “Transaction”) payable in cash. The Transaction is subject to customary closing conditions, including regulatory approval in each market, and closings are expected during H2 2019.

Telefonica CAM is the mobile market leader in Panama and Nicaragua and the second largest mobile provider in Costa Rica, with about 8.7 million total customers. Millicom currently controls and operates cable networks in all three countries, and as such the Transaction represents a perfect complement to Millicom’s existing operations. It reinforces Millicom’s market leadership in Central America and builds on its recent acquisition of Cable Onda, the leading cable operator in Panama.

In addition, the Transaction significantly expands Millicom’s operations in each of the three countries and will thus further diversify and balance the company’s geographic footprint and sources of cash flow. For the 2015-2018 period, Telefonica CAM revenue and Adjusted EBITDA have grown at CAGRs of approximately 4% and 11%, respectively, in US dollar terms. In 2018, Telefonica CAM generated revenue of $709 million and Adjusted EBITDA of approximately $243 million. Capex for the same period totalled $79 million, such that OCF (Adjusted EBITDA less Capex) was approximately $164 million.

The aggregate purchase price implies a multiple of 6.8x 2018 Combined Adjusted EBITDA and 10.1x Combined OCF, whilst on a post-synergy basis it implies 5.8x 2018 Combined Adjusted EBITDA and 8.3x Combined OCF based on cost and capex synergies.

Millicom expects to generate annual run-rate opex and capex synergies of $35-50 million, equivalent to an NPV of approximately $290 million. The projected opex and capex synergies are expected to be largely realized by 2021 and fully realized by 2023 and would stem primarily from: (1) network and IT integration benefits, (2) rationalization of sales, distribution and branding, (3) optimization of support functions, (4) procurement savings from increased scale, and (5) in-market fiber backhaul capabilities. In order to achieve these synergies, Millicom expects to incur pre-tax integration costs over the first two years of approximately $100 million.

In addition, Millicom has identified potential revenue synergies equivalent to an additional NPV of approximately $250 million stemming mostly from cross-selling mobile products to Millicom’s existing cable customers and cross-selling cable services to Telefonica’s mobile customers, as well as increased revenue from lower customer churn resulting from a growing proportion of sales made on a bundled basis.

Mauricio Ramos, CEO of Millicom said “This significant investment of market leading mobile operations will make our combined businesses even stronger. We are acquiring the #1 mobile operator in Panama and in Nicaragua and the #2 mobile operator in Costa Rica. As a result, we now have both fixed and mobile in every market we operate in Latin America. The transaction gives us full in-market scale and the benefits of significant synergies. Furthermore, together with our earlier acquisition of Cable Onda in Panama we are reshaping the industry landscape in Central America, paving the way for a healthy investment environment to help fulfil our purpose of building the digital highways that will connect our people and develop our communities in these countries.”

Key country highlights:


  • #1 mobile operator in a four-player market with 1.6 million customers
  • 4G network covers 74% of population
  • Revenue and Adjusted EBITDA CAGRs of approximately 4% and 7%, respectively, in 2015-2018, in US dollar terms
  • 2018 revenue of $223 million and Adjusted EBITDA of $90 million, resulting in a margin near 41%
  • Dollarized economy and investment grade country increasing Millicom’s US dollar revenue sources

Costa Rica

  • #2 mobile operator in a three-player market with 2.4 million customers
  • 4G network covers 85% of population
  • Revenue CAGR of approximately 13% in 2015-2018, in US dollar terms, drove much faster EBITDA growth over the period
  • 2018 revenue of $253 million and EBITDA of $60 million, resulting in a margin near 24%


  • #1 mobile operator in a two-player market with 4.7 million customers
  • 4G network covers 51% of the population
  • Revenue has declined at a 2.5% CAGR in US dollar terms in 2015-2018, due in part to a weaker currency and to slower overall economic activity
  • 2018 revenue of $232 million, nearly 50% of which are denominated in US dollars, and Adjusted EBITDA of $92 million, resulting in a margin near 40%

Millicom has secured bridge funding commitments to finance the acquisition, and the bridge will be refinanced predominantly with the issuance of new debt by Millicom and its operating subsidiaries. Pro forma for the Transaction, Millicom’s proportionate net debt to Adjusted EBITDA (*2) would increase to approximately 3.0x from 2.5x reported as of December 31 st 2018. Millicom management remains committed to maintaining a healthy balance sheet and to reducing leverage toward its stated medium-term target of 2.0x.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. International acted as financial advisors to Millicom for the Transaction.

*1. Adjusted EBITDA refers to the combined EBITDA of the standalone businesses pre-synergies, excluding management fees and other non-recurring items based on preliminary unaudited 2018 financial statements. Combined EBITDA, capex and OCF are non-IFRS measures.

*2. Proportionate net debt to Adjusted EBITDA is a non-IFRS measure. Please refer to page 6 of this press release for definitions of non-IFRS measures for Millicom.