Telef Ó Nica Sold 60% Of Its Fiber Network In Chile To Kkr For $400 Million

2021-02-22   |   by CusiGO

Telefonica sold 60% of its fiber-optic network in Chile to KKR investment fund for 400 million euros. Through a new company (infraco), the company will be responsible for the operation and deployment of the network in Andean countries, and the Chilean Telefonica subsidiary will retain the remaining 40%, According to the Gazette filed with the securities and exchange administration.

The operator valued infraco’s 100% deal at $1 billion (about 800 million euros), adding that it would reduce its financial debt by about 400 million euros.

KKR is already Telef ó Nica’s partner in telxius, telxius’s infrastructure subsidiary, which owns 40% of telxius, although it has announced that it will sell its main asset, the mobile phone tower, to the USA building for 7.7 billion euros. KKR is also one of the most liquid benchmark shareholders following its acquisition with cinven and Providence in 2020.

“KKR is an investor with extensive experience in fiber wholesale business platforms in other countries, which complements Telefonica’s experience in deploying and operating fiber in its own country,” the operator said.

Telefonica’s optical network in Chile will be handed over to infraco, which will start operating 2 million homes and offices (real estate units) and reach 3.5 million units by 2023, the operator explained. Telefonica explained that infraco is ready to operate in Chile and accelerate the deployment of local optical networks, and provide wholesale access to FTTH services to all telecom service providers, who in turn provide services to their end customers. The deal will be submitted to competition authorities for consideration and is expected to be completed in the first half of 2021.

Laura abasolo, director of Finance and control at Telef ó Nica, assured that “this deal is in line with the group’s goal of accelerating network deployment and achieving the crystallization of asset value through an effective capital structure.”. According to the executive, Telefonica can monetize some of these assets, help reduce debt and implement a strategy to develop new models to adjust its exposure to Latin America.

In addition, the Spanish Telecom multinational will avoid paying 729 million sols (about 165 million euros) to the Peruvian tax authority, as a result of a ruling admitting that the interest charged on tax debts is too high.

The ruling of Peru’s Constitutional Court overturned some of Telefonica’s claims, arguing that the administration responsible for assessing the company’s challenges had exceeded a reasonable time to resolve the case, thereby significantly increasing the interest on the debt. If the income tax liabilities in 2000 and 2001 were 582 million sols (130 million euros), the long litigation time would increase the interest of 1581 million sols (355 million euros).