Telefonica sells Guatemala, El Salvador units to America Movil for EUR 570 mln

America Movil has announced a deal to acquire Guatemala and El Salvador operations from Telefonica for a total of EUR 570 million. In a short statement, the Mexican telecommunications giant said it paid EUR 293 million for 100 percent of Telefonica’s Guatemalan assets and EUR 277 million for 99.3 percent of Telefonica El Salvador. The transaction is subject to customary closing conditions, including regulatory approval for the El Salvador deal. It added that the acquisitions will boost its position in Central America, where it plans to provide next-generation services including 5G.

Telefonica, which owned 60 percent of the Central American units, said the total amount agreed is equivalent to 9.7 times the estimated 2018 EBITDA of the two companies. It said the transaction is expected to generate capital gains before taxes and minorities of around EUR 120 million, mainly from Telefonica El Salvador, and that the sale is part of its portfolio management policy to optimise return on capital and lower debt.

The Spanish group had confirmed that talks were underway to divest its Central American assets earlier in the week, having divided the unit into two separate packages with a view to facilitating the sale. America Movil’s other main rivals in the region – Millicom and AT&T – have been cited as possible buyers of Telefonica’s remaining Central American subsidiaries in Costa Rica, Nicaragua and Panama, with the company also said to be exploring the total or partial sale of its Mexican unit.