Spain’s leading telecommunications group, Telefónica, has announced the sale of a controlling stake in its fiber network in Colombia to a global investment company KKR. With the sale of this majority stake, the telecommunications company expects to reduce its debt by $169 million.
As part of the agreement, KKR will hold 60% of the shares in the new Colombian fiber company, and Telefónica will retain the remaining 40% and contribute its existing fiber assets in the country. The new company will start operating with a fiber-to-the-home (FTTH) network, covering 1.2 million locations in 50 cities and municipalities and serving 380,000 customers by the end of the first quarter 2022. In three years, their goal is to reach 4.3 million sites in almost 90 cities.
The deal between Telefónica and KKR values the new company at $500 million. This entity will be the first independent Colombian open access wholesale digital infrastructure company in the country. The deal still requires regulatory approvals, as stated by the companies.
Telefónica also stressed the fact that the new company will contribute to the government’s goal of improving the connection speeds in Colombia and reaching 70% of connected homes in the next 12 months. The mission of the new company is to increase access to broadband throughout Colombia and broaden the availability of ultra-fast fiber optic Internet, which will benefit a large number of consumers and businesses across Colombia.
The company will be managed independently by a local Colombianl team, but the venture combines the experience of both KKR and Telefónica in the development and operation of Colombia’s premier digital infrastructure network.
In addition, the Spanish operator also wants to extract value from its Telefónica Tech division, which provides IoT, Big Data, cloud and cyber security services. So, we can expect a sell off of its minority stake in that division within the upcoming months.