NJJ will hold a 51% stake in the new JV, with Millicom owning the remaining 49%
In sum – what to know:
Joint structure – Millicom takes a 49% stake alongside NJJ’s 51%, with obligations funded from the acquired company’s cash flows and no recourse to Millicom.
Low upfront payment – Telefónica receives $50 million at closing, with up to $150 million more tied to future value creation.
Option for full control – Millicom can buy NJJ’s stake in years five or six at a 10% discount to its trading multiples.
Millicom International Cellular and investment group NJJ have agreed to acquire Telefónica’s Chilean operations through a jointly controlled vehicle, with NJJ holding a 51% stake and Millicom owning 49%.
Under the terms of the transaction, Telefónica will receive an initial payment of $50 million at closing. The agreement also includes potential earn-out payments of up to $150 million, tied to future structural value creation within the business. These additional payments, as well as the company’s existing financial obligations, will be funded from the acquired entity’s own cash flows and will not be guaranteed by Millicom.
The structure is designed so the acquired business will not be consolidated into Millicom’s financial statements during the period of joint ownership.
Millicom noted it will operate the business from day one and plans to apply its regional operational model to improve performance. The company has the option to purchase NJJ’s stake in years five or six after closing, at a valuation based on Millicom’s trading multiples with a 10% discount, payable in shares. If Millicom does not exercise this option, NJJ will have the right to acquire Millicom’s stake under similar terms.
Millicom said the acquisition of Telefonica’s business in Chile expands its presence in South America while limiting upfront financial exposure and preserving balance-sheet flexibility.
In related news, Millicom has completed the acquisition of Telefónica’s Colombian unit Coltel in a $215 million deal, paving the way for a merger with its Tigo operation to strengthen its position in the Colombian market.
In a statement, Millicom said it closed the purchase of a 67.5% stake in Coltel on February 6 and is now awaiting the second phase of the government-led privatization process to acquire the state’s remaining shares in the telco.
Millicom, which operates under the Tigo brand, has simplified its geographic footprint in recent years. The company exited several markets in Asia and Africa to concentrate on Latin America. The company currently operates across 11 countries in Latin America and has been acquiring assets from Telefónica in markets such as Chile, Uruguay and Ecuador, as the Spanish group exits lower-growth countries to focus on core markets.
Telefónica has been gradually exiting most international markets since 2019, focusing instead on its core operations in Brazil, Germany, Spain and the UK. Telefonica’s chairman, Marc Murtra, previously noted that the company’s exit from Latin America, improves its position to undertake consolidation operations in the telecommunications sector in Europe, where three of its four main markets are concentrated.
