CMI acquires 40pc of Telefonica assets in Central America in $500-million deal

Telefónica reported it had reached an agreement today with Corporación Multi Inversiones (“CMI”) for the sale of 40% of Telefónica’s assets in El Salvador, Guatemala, Nicaragua, and Panama. The value of the sale–which is subject to obtaining the necessary regulatory approvals–totals 500 million dollars.

The operation also includes the payment of an additional amount of up to 72 million dollars, which will be determined by the evolution and the operational performance of the aforementioned assets in the coming years. The implied multiple for the total amount of the transaction means 6.5 times EBITDA 2012 of the companies involved in the operation.

“This operation is part of Telefónica’s policy of proactive management of its asset portfolio and the initiatives to increase the company’s financial flexibility,” the Spanish company said in a press release.

It added: “Central America is politically and economically, a stable region. Total population reaches 30 million, a third of which is under 15 years of age, and its middle class is becoming increasingly important.” The Telefónica Group has been operating in the region of Central America since 1998, when it began the privatization of the sector in El Salvador. Telefónica is one of the leading brands in the region, with high levels of 2G and 3G coverage. The company has maintained a long-term commitment in Central America with a sustained investment over the last years.

Corporación Multi Inversiones (CMI) is one of leading business groups in Latin America. It was established in 1920 and is a family-owned multinational corporation. It operates in nineteen countries on three continents, and manages a selective and diversified portfolio of businesses.

“This agreement allows us,” explained Telefónica, “to leverage its experience and global footprint with CMI’s know-how and local expertise. This new business model offers the opportunity to continue business development in the markets where both companies will work together.”