Millicom has reportedly agreed to take full control of Tigo Guatemala by buying out a 45 per cent stake from its joint venture partner Miffin Associates for $2.2 billion.
This has reinforced its focus on Central and Latin America in a deal tipped to be the highest non-domestic investment in the country in more than 50 years.
In a statement, Millicom explained the transaction was sealed with local partner Miffin Associates on November 12, and it will help it consolidate its position as a leader in Central America.
Millicom has secured bridge financing from a group of international banks to fund the deal, which it plans to refinance by debt and an equity rights offering in Q1 2022.
The operator believes the deal will boost its free cash flow to equity by approximately $200 million in 2021.
Millicom chief Mauricio Ramos commented the deal will help the company transform its financial profile by increasing its cash flow and net income, and “greatly simplify our structure.”
Ramos highlighted Tigo Guatemala as one of its “most successful businesses”, and explained the investment into the operation reflected its confidence in “the thriving economy of Guatemala and our renewed commitment to the digital transformation of its society”.
The transaction appears to be the biggest non-domestic direct investment in Guatemala since at least 1970, the Financial Times reported, citing data from the World Bank.
Millicom has been on the lookout for ways to boost its presence in Central and Latin America for years, including through a deal it scored in 2019 to take over Telefonica’s operations in Panama, Costa Rica and Nicaragua. It also eyed concentrating on the region by exiting the African continent in April and committed $135 million in July into network improvements in its Honduras, Paraguay and Bolivia operations.
Last year, Millicom sold all of its interests in Africa, including Ghana to concentrate on Central and Latin America. It has since cut its losses and is reporting marginal profits.
In Ghana, it merged with Airtel to form AirtelTigo, which is later sold to the Ghana government for a reported US$1, even though both Millicom and Airtel reported making US$25 million each from the transaction.
