Millicom International Cellular S.A. (Tigo), in partnership with NJJ, has officially announced the acquisition of 100% of Telefónica’s interest in its Chilean operations. The transaction, which represents a 99.4% stake in the business, is structured as a 51/49 joint venture, with NJJ holding the majority share. This strategic move marks a significant expansion of Millicom’s South American footprint while employing a sophisticated financial structure designed to protect the company’s balance sheet and preserve capital flexibility.
Under the terms of the agreement, the transaction features an initial closing payment of $50 million. An additional earn-out consideration of up to $150 million is contingent upon structural value creation within the Chilean market. Crucially for Millicom’s investors, the acquired business will not be consolidated into Millicom’s financial statements during the period of joint ownership. All financial obligations, including existing debt and the earn-out payments, are non-recourse to Millicom and will be serviced exclusively by the cash flows of the acquired entity. To further ensure stability, Telefónica is required to contribute approximately USD 92 million (CLP 79 billion) at closing to fortify the company’s balance sheet.
The partnership includes a robust shareholders’ agreement that outlines a clear path for future ownership. Millicom maintains a call option to acquire NJJ’s stake during the fifth and sixth years following the closing. This option is set at a 10% discount to Millicom’s prevailing trading multiples and can be settled in Millicom shares. Should Millicom decline to exercise this option, NJJ holds a reciprocal call option to acquire Millicom’s 49% stake under similar pricing methodologies. This “option-based” approach allows Millicom to manage the asset’s turnaround before committing to full ownership.
From an operational standpoint, Millicom will lead the business from day one. The company intends to implement its “operational playbook” to stabilize what has been characterized as a challenged asset. Marcelo Benitez, CEO of Millicom, emphasized that the deal reflects a disciplined and pragmatic approach to value creation. By isolating leverage and limiting upfront risk, Millicom gains immediate operational control in one of Latin America’s most developed and competitive telecommunications markets without compromising its broader financial health.
For Telefónica, the divestment aligns with a broader corporate strategy to reduce exposure in Spanish-speaking Latin America and refocus resources on core markets in Spain, Brazil, Germany, and the United Kingdom. This shift, accelerated under the leadership of CEO Marc Murtra, addresses the lower profitability relative to the cost of capital in certain regional markets. The total valuation of the deal, including fixed components and deferred payments based on financial milestones, reaches approximately $1.22 billion.
The acquisition places Millicom and NJJ at the helm of a critical infrastructure provider in Chile, a nation recognized by the IMF and World Bank for its stable macroeconomic framework and prudent fiscal management. As the partners look to modernize the network and enhance service innovation, the deal stands as a calculated bet on Chile’s high broadband penetration and the sustained demand for high-quality digital connectivity.