Telefonica squabbles with Millicom over Costa Rica unit takeover

Back in February 2019, Telefonica signed a significant deal for the sale of its Costa Rican, Panamanian and Nicaraguan units for a total of $1.65 billion. 

 

At first, the takeover process went smoothly, with the transfer of the Nicaraguan assets complete by May and the Panamanian unit by August. Regulatory approval for purchase of the $570 million Costa Rican unit was agreed in September and everything look set for a clean transition.

 

But over six months later, little progress has been made on the handover of the Costa Rican unit, forcing Telefonica to seeking legal action against Millicom.

 

Telefonica have informed Millicom that the lawsuit will soon be filed with a New York court to demand compliance with the contract, as well as seeking compensation for damages that the breach of contract has or could cause Telefonica. 

 

Millicom, however, denies that it is in breach of contract, supposedly awaiting yet more regulatory approval set to be received at the start of May. The operator said that it would “vigorously defend itself” against any legal challenges and that it intended to drop the deal if it does not receive the requisite approval in May.

 

Telefonica announced a new strategy of pulling back from its New World operations since late last year, aiming to focus more closely on its European markets.