Background on Telefónica and Millicom
Telefónica, a Spanish telecommunications company, has agreed to sell its Ecuadorian subsidiary, Otecel, to Millicom for $380 million (approximately €330 million at the current exchange rate). This move is part of Telefónica’s strategy to reduce its exposure in Hispanoamérica, following the sales of its subsidiaries in Argentina, Peru, Uruguay, and Colombia.
Telefónica’s Divestments
- Argentina: Sold to Grupo Clarín for approximately $1.19 billion
- Peru: Sold to Integra Tec International for $900,000
- Uruguay: Sold to Millicom Spain for $389 million
- Colombia: Sold to Millicom for $368 million
The sales in Argentina and Uruguay have been finalized, while transactions in Uruguay, Colombia, and now Ecuador are pending regulatory approvals.
Impact on the Ecuadorian Market
Telefónica’s Ecuadorian subsidiary, Otecel, has around 5 million customers and holds approximately a 28% market share as of the first quarter, trailing Claro’s 54% but leading CNT’s 18%.
Millicom’s Perspective
Millicom, a Luxembourg-based telecommunications company, sees this acquisition as an opportunity to strengthen its presence in Southeast America. Ecuador’s stable and dollarized economy with favorable macroeconomic fundamentals makes it an attractive market for digital transformation.
Key Questions and Answers
- What is the deal about? Telefónica has agreed to sell its Ecuadorian subsidiary, Otecel, to Millicom for $380 million.
- Why is this significant? This sale is part of Telefónica’s strategy to reduce its presence in Hispanoamérica, following similar divestments in Argentina, Peru, Uruguay, and Colombia.
- What does Millicom gain? The acquisition strengthens Millicom’s regional presence and commercial reach, allowing it to focus on digital innovation, inclusion, and long-term growth in a stable, dollarized market with favorable macroeconomic conditions.
- What is Otecel’s market position? Otecel has about 5 million customers and holds approximately a 28% market share in Ecuador, trailing Claro’s 54% but leading CNT’s 18%.
