Millicom announced that they have made a preliminary deal to merge the company's Colombian operations with Empresas Publicas de Medellin's (EPM) fixed line business. Under the terms of the agreement Millicom, is given the opportunity to boost its growth in cable TV and broadband in Columbia. The target is to double annual revenues of Millicom in the next five years. In the agreement, EPM, a provider for cable TV and for fixed telephone services across the Medellin region, will get a 50% stake plus one share in the combined company. EPM was valued at US$2.1 billion and Millicom's Colombian business was valued at US$1.3 billion.
The deal is currently under negotiations for the final terms. The terms are will be subjected to regulatory and government approvals. The deal is set to double the number of homes receiving entertainment from Millicom's business in Colombia. The ownership structure will be tailored in line with the endorsement of the Medellin city council. The board of directors of the combined company would have four appointed by Millicom and three appointed by EPM.
"This material increase in size will generate economies of scale over time. The savings will enable Millicom to increase the profitability of its Latin American cable business while at the same time investing in attractive content," Millicom said.
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