The Colombian telecom market may see a merger between Millicon and EPM Telecomunicaciones companies. On Feb. 5, Millicom International Cellular and EPM (Empresas Publicas de Medellin) announced that they have entered into exclusive negotiations regarding the possible combination of their Colombian telecom operations.
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EPM is an industrial and commercial conglomerate owned by the municipality of Medellin. It is the largest shareholder of UNE EPM Telecomunicaciones, which provides cable TV and fixed telephony services in the region encompassing Medellin, the second largest city in Colombia. UNE owns 25% of Tigo Colombia, in which Millicom owns 50% and one share. The remaining shares of Tigo Colombia belong to ETB (Empresa de Telecomunicaciones de Bogota) from Bogota.
The purpose of the negotiation is to evaluate the possible merger between the holding company that owns 50% of Tigo and UNE EPM to create an integrated telecommunication operator in Colombia.
The companies said the market dynamics for fixed and mobile integration create the potential to offer the best quality services to customers, most notably digital services. As a consequence, both parties agree that it is the right time to consider integrating their businesses with a shareholders’ agreement similar to the one that has been governing the companies’ relationship over the past six years.
Recently, UNE has started offering mobile services, partly through a roaming agreement with Tigo Colombia.
Hans-Holger Albrecht, president and CEO for Millicom, stated that the combination of a strong local partner with the international experience of Millicom has provided a solid model in the past and will be even more important for the future. Millicom is also targeting the integration of digital service offerings under the combination of mobile and fixed businesses, which may allow the company to move faster.
UNE EPM CEO, Juan Esteban Calle, said that the agreement with Millicom enables UNE EPM to improve its competitive position in the telecommunications industry.
The companies noted that the product portfolios and geographic presence of UNE and Tigo Colombia are very complementary.
The contemplated transaction would be a merger of equals and would be subject to regulatory approval. Under the terms provisionally discussed between the two parties, Millicom and EPM would consolidate their respective telecommunication businesses in Colombia into a newly created entity.
The discussions are expected to conclude during the first half of 2013.
Last year, UNE lead the way in LTE deployment when it launchedservices in Colombia in June.
