Liberty Latin America Ltd. (NASDAQ: LILA and LILAK, OTC Link: LILAB) has announced it has entered into a definitive agreement to acquire Telefónica S.A.´s wireless operations in Costa Rica (“Telefónica Costa Rica”), one of Costa Rica´s largest mobile service providers, the company said.
The all-cash transaction values Telefónica Costa Rica at an enterprise value of USD 500 million on a cash- and debt-free basis. This equates to an estimated multiple of 6.0x Telefónica Costa Rica´s fiscal year 2019 Adjusted OIBDA1, including projected annual run-rate synergies2.
Telefónica Costa Rica is Costa Rica´s second largest mobile service provider. As of June 30, 2020, the business had 2.3 million subscribers4, and its mobile network currently has approximately 90% LTE population coverage.
Liberty Latin America intends for Telefónica Costa Rica to become part of the VTR credit pool, which will also include Cabletica, and to finance the acquisition (including fees and expenses) with incremental local borrowings and borrowings at VTR Finance N.V., targeting approximately 4x debt on the acquired asset´s Adjusted OIBDA. The remaining funding is anticipated to come from LLA liquidity including future free cash flow generation, as well as other forms of debt and/or equity capital.
The transaction is subject to certain customary closing conditions, including regulatory approvals, and is expected to close in the first half of 2021.
Advisory and financing services to Liberty Latin America on the transaction have been provided by JP Morgan, LionTree and Scotiabank.
Liberty Latin America is a communications company operating in over 20 countries across Latin America and the Caribbean under the consumer brands VTR, Flow, Liberty, Más Móvil, BTC, UTS and Cabletica. For more information, visit www.lla.com.