Millicom to completely acquire Tigo Guatemala for $2.2 billion

The telecommunications and media company millicom has announced that it will completely acquire Tigo Guatemala for $2.2 billion in cash.

The conclusion of the transaction is that Millicom will own a 100% equity interest in Tigo Guatemala. The transaction is expected to gradually improve Millicom’s cash flow and net income and will increase Millicom’s equity free cash flow by approximately $200 million before incremental financing costs.

Many leading international banks have bridge financed the fund for the transaction, the telecom company Millicom is willing to refinance the bridge with the planned issuance of approximately $1.5 billion of new long term debt and it Is expected by Q1 2022 that $750 million of new equity via rights will be offered.

Millicom’s leverage is expected to improve approximately by 3.1x in Q1 2022 after the transaction and the planned equity offering and will continue to decline therafter towards the company’s leverage target of 2.0x.

The company has been on the lookout for ways to enhance 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.

Millicom will be one of the leading telecommunication service provider in Central America with this transaction.

The Chief Executive Officer of Millicom, Mauricio Ramos said:

“We are delighted to have signed this agreement to consolidate a 100% ownership position in Tigo Guatemala, one of our most successful businesses. The transaction is right in line with our stated inorganic capital allocation strategy, which includes the acquisition of the remaining minority interests owned by third parties in our operations, when those transactions can be executed in an accretive manner.”