America Movil has announced the termination of its deal to acquire 99.3 percent of Telefonica’s Movistar El Salvador unit due to the strict anti-trust conditions imposed by the country’s competition watchdog. The decision is by mutual agreement and comes “after careful consideration by both parties of the conditions to obtaining regulatory approval established by the Superintendencia de Competencia in their recent ruling on the proposed transaction,” said the Mexican telecommunications giant in a statement.
Last month’s El Salvador’s anti-trust regulator approved the transaction but imposed a number of strict conditions on Claro El Salvador, including limits on spectrum currently used by Telefonica’s Movistar unit in the country. Specifically, Claro was asked to hand back 25 MHz with national coverage in the 850 MHz band and a further 30 MHz in the 1900 MHz band to telecom regulator SIGET for the ultimate benefit of a smaller operator or a new market entrant, among other competition safeguards.
Telefonica reached an agreement to sell its Guatemala and El Salvador assets to America Movil for a total of EUR 570 million back in January 2019. The parties agreed that Telefonica El Salvador had an enterprise value of EUR 277 million and had initially expected the deal to close last year.
Earlier this year, Millicom aborted a deal to acquire Movistar Costa Rica for EUR 570 million, blaming regulatory hurdles, with Telefonica subsequently reaching an agreement to sell the unit to Liberty Latin America for USD 500 million.
Last November Telefonica announced the “operational spin-off” of its remaining Latin American units as part of a wide-ranging action plan designed to modulate its exposure to the region and focus on its core markets of Spain, the UK, Germany and Brazil.
