Telefonica purchase of ETB raises questions (Colombia)

www.WirelessFederation.com/news: Several market implications might arise with the potential purchase of Colombian telecoms operator ETB by Telefonica as ETB also owns 25% of mobile operator Tigo.

Tigo which is controlled by Luxembourg-based mobile group Millicom International Cellular had 4.19 million subscribers at the end of the year while Telefonica operating under the Movistar brand had 8.96 million subscribers at the end of 2009. When combined, the total subscriber base of the company will become 13.2 million, making it a distant second from America Movil’s Comcel, which ended the year with 28.8 million subscribers.

The merger will also result into four million fixed line subscribers and 1 million internet customers of Telefonica. Telefonica might also sell its stake in Tigo after which the other two shareholders, UNE-EPM with a 25% stake and Millicom with 50%, would have the right of first refusal.

EUR700 million (USD962 million) would be invested by Telefonica to acquire a controlling stake in ETB. 86.59% of ETB is currently controlled by the Bogota municipality and minority shareholders have the remainder. In order to improve its situation in the highly competitive telecom market, a partner is needed by ETB. The telco plans to sell new shares, equivalent to a 36.6% stake.