The all-cash deal places an enterprise value of $500 million on the business unit, on a cash- and debt-free basis. It also equates to close to six times Telefónica Costa Rica’s fiscal year 2019 Adjusted OIBDA, including projected annual run-rate synergies.
“We have had great success in Costa Rica through our 2018 investment in 80%-owned Cabletica, a leading fixed-provider in the country and one of LLA’s fastest growing businesses, and are excited to increase our investment in the country,” said Balan Nair (pictured), president and CEO of Liberty Latin America.
“Telefónica Costa Rica has delivered strong financial performance, including high single-digit top-line growth and strong double-digit Adjusted OIBDA growth from 2017-2019.”
As the second largest mobile service provider in Costa Rica’s Telefónica Costa Rica has close to 2.3 million subscribers and its mobile network currently has approximately 90% LTE population coverage.
Once the transaction is complete, Liberty Latin America intends for Telefónica Costa Rica to become part of the VTR credit pool, which will also include Cabletica.
“Combined with Cabletica, we look forward to creating a leading integrated communications player providing customers in Costa Rica with high-quality value propositions and unparalleled customer service. This transaction comes at an attractive valuation, consistent with our disciplined approach towards M&A,” added Nair.
It will also finance the deal with incremental local borrowings as well as borrowings at VTR Finance NV, targeting approximately 4 times debt on the acquired asset’s Adjusted OIBDA. While the remaining funding is expected to come from LLA liquidity.
Subject to standard closing conditions and regulatory approvals, the deal is expected in H1 2021. JP Morgan, LionTree and Scotiabank provided advisory and financing services to LLA.
