Fiber asset consolidation and M&A activity in Latin America are accelerating, driven by the need of incumbents for operational efficiency and debt reduction, amid an intense competition with and among internet service providers (ISPs) and high capital expenditure required to expand fiber-to-the-home (FTTH) networks.
In Chile, Telefónica Chile is evaluating the sale of its remaining 40% stake in OnNet Fibra, the fiber optic network infrastructure unit created with KKR in 2021.
OnNet was created as a neutral fiber optic network after Telefónica sold a 60% stake to the US-based fund, valuing the business at US$1 billion.
Subsequently, OnNet Fibra acquired Entel‘s fiber optic network for approximately US$358 million, expanding its coverage to more than 3.9 million homes passed.
The agreement allowed Entel to focus on client activation, customer service and marketing, while OnNet Fibra manages the physical infrastructure.
Now, Telefónica seeks to sell its remaining stake to accelerate divestments in the region. The telco said that proceeds from the sale would be used to reduce the financial debt of its local operations.
The move is complementary to, but separate from, the sale of Telefónica Movistar‘s telecom operation in the country.
In Colombia, Telefónica also operates a local OnNet Fibra neutral fiber joint venture with KKR, created shortly after its Chilean counterpart.
There, Telefónica has agreed to sell its whole telecom operation, consisting of a 67.5% stake in Telefónica Colombia (Movistar) to Millicom (Tigo) for approximately US$400 million. The combined entity will likely leverage the existing joint infrastructure, including the previously established OnNet Fibra Colombia.
In Chile, the Spanish group has appointed Citi to advise on the sale of Movistar, as the group shifts focus toward the core markets of Brazil, the UK, Spain and Germany.
For the Chilean Movistar operation, a major contender is Millicom, which has been acquiring other Telefónica assets in the region, including units in Ecuador and Uruguay, in addition to Colombia.
The sale of Telefónica Chile includes as other potential buyers local rivals Entel and América Móvil.
Previously part of a joint bid with América Móvil, Entel is now expected to pursue the acquisition on its own. América Móvil said it is now also exploring a separate, individual bid.
Beyond ONE, a Dubai-based firm behind Virgin Mobile Latin America, has also been mentioned as a potential bidder for Movistar.
Any sale to major local incumbents, such as Entel or Claro, would face significant antitrust scrutiny, increasing interest in alternative buyers.
On the other hand, acquisition by a market entrant would maintain the four-player structure that has impacted telcos profitability and investment capacity in recent years.
Brazil
In Brazil, Ligga Telecom (formerly Copel Telecom), a fiber optic and 5G operator from Paraná state, is also seeking investors or buyers for its operations.
The company, controlled by businessman Nelson Tanure, is reportedly asking around 2.5 billion reais (US$500 million) for its fiber infrastructure and mobile operations to help Ligga reduce debt.
Among the interested parties, Brasil TecPar, controlled by Macquarie, is evaluating the asset, according to market reports. Telefônica Brasil and Sky, part of the Vrio conglomerate (DirecTV Latin America) controlled by Argentina’s Werthein group, also reviewed the operation.
Previously, as first reported by BNamericas, V.tal considered acquiring Ligga and even conducted due diligence, but the process did not move forward.
Telefônica Brasil also reportedly considered acquiring internet service provider Desktop, which operates in São Paulo state. Claro is also looking at the asset.
Meanwhile, TIM is considering the sale or merger of its neutral network unit I-Systems. Created in 2021, I-Systems is 49%-owned by TIM and 51% by IHS Towers.
TIM is evaluating selling its stake or negotiating control to sell the entire unit. According to news outlet Valor, Alloha Fibra is conducting due diligence to acquire TIM’s fiber business.
Publicly, TIM has stated that it is exploring the best opportunities to generate value from its fiber business, which remains small compared to other players and has seen limited growth in recent.
According to the telco, the outcome could involve either a sale or an acquisition.
(The original version of this content was written in English)