Merger on the cards for Colombian number three operator

The number three operator in Colombia is looking to merge with a smaller local provider to increase its presence in the market. The Millicom International Cellular SA group, which typically focuses on emerging markets, is negotiating a possible merger with between its mobile arm Tigo and UNE, the operator branch of Colombian conglomerate EPM.

UNE provides services to the second-largest city in Colombia – Medellin – with an offering that encompasses mobile, cable and fixed-line. UNE currently owns a 25% stake in Tigo Colombia – Millicom’s share is 50% plus one - and the two companies have cooperated for six years with promotions and roaming agreements.

Combining the operators into a single unit is a logical next step, according to Millicom Chief Executive Hans-Holger Albrecht, who said: "The combination of a strong local partner with the international expertise of Millicom has provided a solid model in the past and will be even more important for the future."

Latin America is a major market for Millicom, generating around 40% of its revenue. At the end of Q4 2012, Tigo’s connections numbered 5.4 million in Colombia. While financial details have not been finalised, Millicom has claimed that the consolidated net debt will not be greater than 1.5x EBITDA.

While negotiations are ongoing, a deal is expected by the end of H1 2013.

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