Millicom backed out of a $570 million deal to acquire Telefonica’s mobile business in Costa Rica, explaining it had failed to gain the necessary regulatory approvals.
In a statement issued on 2 May, the Luxembourg-based operator said the acquisition had depended on receiving previously agreed regulatory approvals by 1 May, “certain of which have not yet been issued”.
A share purchase agreement with Telefonica established “an end day of 1 May”, Millicom explained, adding once the deadline expired “either party may terminate” the deal.
The acquisition was agreed in February 2019 as part of a broader deal [1] covering Telefonica assets in Central America.
Telefonica operates the Movistar brand in Costa Rica, with the unit’s 2.3 million mobile connections at end Q1 making it the country’s second-largest operator after ICE.
Responding to Millicom’s withdrawal, Telefonica pointed to a previous statement to Spain’s National Securities Market Commission on 29 April, threatening legal action [2] if the deal was abandoned.
Millicom pledged “vigorously defend any action brought by Telefonica in this matter”.
[1] https://www.mobileworldlive.com/featured-content/top-three/millicom-moves-on-telefonica-central-america-units/
[2] https://www.mobileworldlive.com/featured-content/top-three/millicom-faces-telefonica-backlash-over-costa-rica-deal/
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