Fiber optics: KKR, Entel and Telefónica agreement for PangeaCo terminated due to ‘non-compliance’ | Internet | companies | Peru | Indecopy | sale | Telefonika Hispam | ECONOMY

READ ALSO Pangeaco, Telefónica’s new company in Peru, will focus on expanding its fiber network.

According to an important fact sent by the National Telecommunications Company (Entel) to the Financial Market Commission (CMF) of Chile, PangeaCo said the deal will not be completed due to “failure to comply with certain closing conditions stipulated in the contract“, in particular related to a parallel operation between KKR and Telefónica Hispam, which will not be implemented.

In this context Telefónica Hispam has expressed its intention – due to an important fact – to formalize the termination of the contract.. “Currently, the parties are discussing the terms of termination of the contract.“, the message says.

READ ALSO Competition and technological transition impact Telefonica’s earnings and assets: what comes next?

The original agreement, announced on July 6, 2023, provided for a share structure in which KKR would enter PangeaCo with a 54% stake, Entel Perú with 10%, and Telefónica Hispam retaining 36%. However, Telefonica Hispam is now seeking termination of the contract, arguing that the parallel deal with KKR will not proceed as planned.

In the letter, Entel emphasized that “It is not possible at this time to estimate the impact that completion of the transaction may have on the Company’s consolidated earnings.“

After the sale of PangeaCo Telefonika Hispam He hoped to reduce the group’s net debt, which topped €26 billion as of March, by around €200 million. In addition, the agreement provided for variable payments to Telefonica for four years following the closing of the operation. As part of the deal, Telefónica del Perú and Entel Perú would transfer their fiber networks to a new company controlled by KKR and sign contracts for wholesale telecom services.

READ ALSO Waoo reaches agreement with PangeaCo: aims to attract 2.6 million new customers by 2024

This fact takes place in the complex context of Telefonica’s activities in Peru. Yesterday, the general meeting of shareholders approved a set of financial measures aimed at overcoming the current difficult situation in the company. The most notable decision was the reduction of the share capital to S$1,150 million.

The purpose of this measure is to compensate for accumulated losses up to September 30, 2024, reflected in the latest financial statements. Telefónica said its accumulated losses in 2024 already stood at S$2.800 million.

Plans that are no longer destined to come true

Following the acquisition of PangeaCo, KKR planned an additional investment of nearly US$200 million to more than double the country’s fiber network. This would expand coverage from 2 million to 5.2 million homes in 86 provinces by the end of 2026.

READ ALSO EU gives green light to connect Peruvian fiber partners

It was also planned to operate the network under the brand ON*NET fiber optic Peruoperating it as an independent platform open to all Internet providers, with the aim of promoting competition in the market. Telefónica del Perú and Entel Perú will be the first clients of this network.

Control consulted with both Telefonica del Peru like KKR if they made an official statement. The first one pointed out that “will not respond to request for comment“, and the second has not yet given an answer.

However at the end of the day Telefonica del Peru reported an important fact to the Securities Market Supervisory Authority (SMV), stating: “As of today, our controlling shareholder (Telefónica Hispam) has informed us that the parties to the said transaction are in negotiations. As soon as any relevant event occurs, the market will be informed accordingly.“

Document confirming the termination of the agreement between Telefónica and KKR, according to a letter from Entel.

READ ALSO Telefónica has approved the sale of its fiber business to KKR and Entel

YOU MAY BE INTERESTED ABOUT PANGEACO