Millicom withdraws from USD 570 mln acquisition of Telefonica Costa Rica

Millicom confirmed it has pulled out of a USD 570 million agreement to acquire Telefonica’s mobile telecommunications assets in Costa Rica, paving the way for possible legal action from the Spanish operator. In a brief statement, Millicom said it exercised its right to terminate the Share Purchase Agreement (SPA) on the grounds that Telefonica had failed to secure “required regulatory approvals that were agreed by the parties and set forth in the SPA, certain of which have not yet been issued,” without providing further details.

Telefonica has yet to comment on Millicom’s decision but last week announced that the conditions required for closing the deal had indeed been met and that it would be taking legal action in US courts as soon as appropriate to demand compliance with the agreement and compensation for any damage caused. Luxembourg-based Millicom, in turn, said it intended to vigorously defend itself against any action brought by Telefonica in the matter.

The two companies reached the agreement back in February 2019, as part of a wider deal involving Telefonica’s mobile telecommunications assets in Panama and Nicaragua as well as Costa Rica. Millicom has closed the acquisition Telefonica’s operations in Panama and Nicaragua but is claiming it needs the permission of Costa Rica’s Comptroller-General to finalise the acquisition, according to local business daily El Financiero. The report also said Costa Rica’s vice minister of telecommunications Edwin Estrada had indeed authorised the transfer of Telefonica’s shares to Millicom. 

Last November the Spanish group announced the “operational spin-off” of its 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.