Telefónica, KKR and Entel terminate agreement related to Pangea, the wholesale fiber operator in Peru | Companies

Telefónica, the Kohlberg Kravis Roberts fund (KKR) and the Chilean National Telecommunications Company (Entel) terminated an agreement under which KKR and Entel jointly acquired 64% of Pangea, a wholesale fiber optic company in Peru. This deal included the Spanish telecommunications company holding a 34% stake through its subsidiary Telefónica Hispam. On the one hand, Entel informed Chile’s Financial Market Commission, equivalent to Spain’s National Securities Market Commission (CNMV), that the agreement had been breached as Pangea reported “non-compliance with certain closing conditions.” in the deal.

“Pangea has advised that due to the failure to comply with certain closing conditions provided for in the SSA (in relation to the agreement) relating to a parallel transaction between KKR and Telefónica Hispam in respect of Pangea which will not materialize, Telefónica Hispam has stated that it intends to formally document the termination of the SSA . The SSA parties are currently negotiating the terms of such termination,” Entel explained in its statement. “It is not possible at this time to estimate the impact that the completion of the transaction may have on the Company’s consolidated earnings,” Entel added.

For its part, Telefónica’s subsidiary in Peru informed the Stock Market Authority of that South American country that, to date, its controlling shareholder, that is, the Telefónica group, has informed them that the parties to the above-mentioned transaction “they are negotiating” and that as soon as ” some important event,” the market will be informed.

Specifically, the agreement reached last July called for KKR to acquire 54% of Pangea and Entel to acquire another 10%, so Telefónica Hispam would retain 36% of the Peruvian fiber wholesale company.

Thanks to this operation, the Telefónica group will reduce its net debt by approximately 200 million euros, which the company then reported to the National Securities Market Commission (CNMV). As part of the deal, Telefonica del Perú and Entel will sell certain assets of their fiber optic communications infrastructure (FTTH) to Pangea, as well as sign a number of contracts, including for the provision of wholesale communications services. with Telefonica del Perú and with Entel Perú.

As the operator explained then, after the transaction is closed, the net financial debt of the Telefónica group will be reduced by approximately 200 million euros, to which “certain variable payments” will be added over the next four years. In this context, KKR’s goal was to create and operate a new fiber company in Peru that would combine the fiber networks of Pangea, Telefónica del Perú and Entel Perú. In fact, KKR’s idea was to make an additional investment of around $200 million (almost €190 million) to “more than double BRA’s superfast network” in the country and go from covering around 2 million homes to 5.2 million .