Leading communications and entertainment company Liberty Latin America and telecommunications giant America Movil have announced an agreement to combine their respective Chilean operations, VTR and Claro Chile, to form a 50:50 joint venture.
The proposed transaction combines the complementary operations of VTR, a leading provider of high-speed consumer fixed products such as broadband and pay TV services, where it connects close to three million subscribers nationwide, and Claro Chile, one of Chile’s leading telecommunications service providers with over 6.5 million mobile customers.
The aim, the partners say, is to create a business with greater scale and product diversification, and a capital structure that will enable significant investment for fixed fibre footprint expansion. The new entity also aims to be at the forefront of 5G mobile delivery. By 2025, the joint venture anticipates passing six million homes through its fixed network; the majority will have access to FTTH infrastructure.
Not surprisingly the partners say they expect the joint venture will generate significant operating benefits and associated value creation. Most of these benefits relate to cost savings, driven by network and operating efficiencies resulting from the combination.
The partners also expect the joint venture to develop additional revenue streams through cross-selling opportunities and scale.
The transaction excludes all telecommunication towers owned indirectly by America Movil in Chile.
Completion of the transaction is subject to certain customary closing conditions, including regulatory approvals, and is expected to close in the second half of 2022. The transaction is not subject to Liberty Latin America or America Movil shareholder approvals.