Liberty Latin America and América Móvil recently announced an agreement to combine their respective Chilean operations, VTR and Claro Chile, to form a 50:50 joint venture.
The proposed transaction combines the complementary operations of VTR, a leading provider of high-speed consumer fixed products, such as broadband and Pay TV services, where it connects close to 3 million subscribers nationwide, and Claro Chile, one of Chile’s leading telecommunications service providers with over 6.5 million mobile customers, to create a business with greater scale, product diversification, and a capital structure that will enable significant investment for fixed fiber footprint expansion and to be at the forefront of 5G mobile delivery. By 2025, the JV anticipates passing 6 million homes through its fixed network and the majority will have access to FTTH infrastructure.
The parties expect the JV will generate significant operating benefits and associated value creation, with estimated run-rate synergies of over $180 million, 80% of which are expected to be achieved within three years post completion. Most of these benefits relate to cost savings, driven by network and operating efficiencies resulting from the combination. In addition, parties expect the JV to develop additional revenue streams through cross-selling opportunities and scale.
LLA and AMX bring significant experience in the integration and execution of identified synergies in the context of in-country consolidations and convergence transactions in the region. Claro Chile owns a DTH business which VTR would be unable to operate according to restrictions imposed by the Chilean Antitrust Courts, following its acquisition of Metrópolis in 2005. If these restrictions remain in place at the time of completion, both parties have agreed to take every necessary step to comply with such restrictions.
