8-K: Liberty Latin America and Millicom to Combine Costa Rica Operations in All-Stock Deal

Liberty Latin America and Millicom have agreed to combine their Costa Rican operations in an all-stock transaction aimed at accelerating fiber network expansion and enhancing customer services.

Summary

• Liberty Latin America (LLA) and Millicom have announced an agreement to combine their operations in Costa Rica.
• The deal is an all-stock transaction where LLA and its minority partner will hold approximately 86% and Millicom 14% of the combined entity.
• The combined operations had an Adjusted OIBDA of approximately $255 million, more than 440,000 broadband subscribers, and net debt of $533 million as of December 31, 2023.
• The merger aims to increase fiber network investment and improve service offerings in Costa Rica.
• The transaction is expected to close in the second half of 2025, subject to regulatory approvals and other closing conditions.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the merger, highlighting benefits such as increased investment, improved services, and enhanced competitiveness. The deal is expected to be beneficial for both companies and the Costa Rican market.

Positives

• The merger is expected to accelerate the transition to fiber-to-the-home (FTTH) technology.
• The combined entity will be a stronger, more competitive operator with increased investment capacity.
• The transaction is expected to enhance customer experiences and drive innovation.
• The merger should improve commercial offerings and provide customers with access to mobile services and premium content.
• The deal is expected to promote high-quality, good value services and access to the digital economy for all Costa Ricans.

Risks

• The transaction is subject to regulatory approvals and other customary closing conditions.
• There are risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.
• These risks include events outside of the companies' control, such as natural disasters and pandemics.
• The ability to obtain regulatory approvals and satisfy other closing conditions is not guaranteed.

Future Outlook

The transaction is expected to create a scaled platform for accelerated investments in fiber network expansion and enhance customer services. The deal is expected to close in the second half of 2025.

Management Comments

• Balan Nair, President and CEO of Liberty Latin America, stated that the combination will accelerate the transition to FTTH and enable the delivery of exceptional high-speed services.
• Mauricio Ramos, Chair of Millicom, said that the combined operations would significantly benefit the telecommunications sector by enhancing fiber network investment.

Industry Context

The telecommunications industry in Costa Rica is undergoing rapid technological advancements with the deployment of fiber networks by multiple operators. This merger is a strategic move to increase competitiveness and promote high-quality services in the market.

Comparison to Industry Standards

• The combination of LLA and Millicom's operations in Costa Rica is similar to other consolidation efforts seen in the telecommunications industry globally, where companies seek to gain scale and improve efficiency.
• The focus on fiber network expansion aligns with the global trend of increasing demand for high-speed internet access.
• The combined entity's subscriber base of over 440,000 is a significant market share in Costa Rica, but it will need to compete with other operators also investing in fiber.
• The Adjusted OIBDA of $255 million indicates a substantial operation, but its profitability will need to be compared to other regional telecom providers to assess its performance.

Stakeholder Impact

• Shareholders of both Liberty Latin America and Millicom will be impacted by the transaction, with changes in ownership and potential value creation.
• Customers in Costa Rica are expected to benefit from improved services and increased competition.
• Employees of both companies will be affected by the integration of operations, with potential opportunities and changes in roles.
• The transaction is expected to have a positive impact on the Costa Rican economy through increased investment in infrastructure.

Next Steps

• The companies will seek regulatory approvals for the transaction.
• They will work to satisfy other closing conditions.
• The integration of the two operations will occur after the transaction closes.

Key Dates

Keywords

merger, acquisition, telecommunications, fiber networks, Costa Rica, Liberty Latin America, Millicom, broadband, FTTH, OIBDA