Telefónica to sell Ecuador unit to Millicom for €330 million

Telefónica has agreed to sell its Ecuadorian subsidiary to Millicom Spain for €330 million, continuing its strategic retreat from Latin America under chairman Marc Murtra.

The sale of Otecel (which operates as Movistar Ecuador) which holds 28 percent of the local mobile markets with five millions customers was announced on Friday evening and is subjected to regulatory approval.

In a statement, Telefónica said the deal is part of its plan “to optimise its portfolio and progressively reduce its exposure in Latin America, focusing on key markets and generating sustainable value” (Cited by El Cronista).

Telefónica’s €2.3 billion Latin American exit plan

Since Murtra became president, Telefónica has divested €2.33 billion in Latin American assets, including:

• Argentina: €1.19 billion (Grupo Clarín)
• Peru: €900,000 plus €1.2 billion assumed debt
• Uruguay: €389 million (Millicom)
• Colombia: €368 million (Millicom)
• Ecuador: €330 million (Millicom)

Millicom CEO Marcelo Benítez said the deal reflects “long-term confidence in Latin America,” calling Ecuador “a dynamic and growing digital market within a stable, dollarised economy.”

Spanish banks are cautious. Renta 4 maintained its “hold” rating, noting that the deal could pave a way for other exits such as Chile or Mexico. Bankinter’s Elena Fernández-Trapiella said Latin America was “a burden” with lower profit margins.

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