Telefónica has brought to an end more than three decades of direct presence in Chile after closing the Sale of 100% of Telefónica Móviles Chile to a consortium formed by Millicom Spain and NJJ Holding, the investment vehicle linked to French businessman Xavier Niel. The deal was signed and completed on the same day, demonstrating that the agreement was very advanced and that both parties wanted to expedite the process.
The transfer of the Chilean subsidiary comes amid the Spanish group's withdrawal from several Latin American markets and fits perfectly into the divestment strategy in Latin America announced by the company. The goal of the current president, Marc Murtra, is to concentrate resources in its main markets: Spain, Brazil, Germany and the United Kingdom, as well as to strengthen its profile as a relevant player in the European telecommunications and technology sector.
Price, agreement structure and debt assumed
The transaction has been valued at a fixed amount of $1.215 billion (approximately €1.030 billion at the current exchange rate), plus a potentially variable tranche of an additional $150 million (approximately €126 million). This extra component is conditional upon the future evolution of the Chilean telecommunications market already certain milestones agreed between the parties.
Within this framework, the Spanish company will receive a cash payment of 50 million dollars (around 42 million euros) at the time of closing, as well as a deferred payment of $340 million (approximately €286 million) linked to Telefónica Chile's financial results in the coming years. This earn-out mechanism allows the final price to be adjusted to the actual performance of the business.
The overall calculation of the operation also takes into account that the subsidiary presented a net financial debt of 479 million eurosThis burden now falls under the purview of the new owners. From Telefónica's perspective, the agreement contributes to a further reduction in its consolidated debt and improves its balance sheet, a key aspect of its current financial roadmap.
The company has specified that the price includes the usual adjustments in this type of corporate transactionThese include prior commitments, available cash funds, and certain contributions intended to stabilize the Chilean company's balance sheet. Part of the difference between the reported "firm value" and the net cash inflow is explained precisely by these adjustments and the amounts allocated to meet existing obligations.
Share distribution between Millicom and NJJ and future options
In the new corporate structure, it will be NJJ, who will initially hold 51% of the capital of the Chilean companywhile Millicom will control the remaining 49%. NJJ is the investment vehicle of the family of Xavier Niel, founder of the Iliad group and one of the most active figures in the telecommunications sector in Europe, where he holds stakes in operators and technology companies.
Millicom, headquartered in Luxembourg and with an extended presence in Latin America through the Tigo brand, has established itself in recent years as main buyer of Telefónica's Latin American assetsIn addition to Chile, it has already acquired the Uruguayan subsidiaryEcuador and Colombia, and has been gaining weight in the region through staggered acquisitions.
The partnership agreement between NJJ and Millicom incorporates a cross-buy option system regarding the respective stakes. Millicom will have the option to acquire the 51% held by NJJ during the fifth and sixth years after closing, applying a valuation based on Millicom's share price multiples with a 10% discount, payable in shares of the Luxembourg operator itself.
If Millicom chooses not to exercise that option within the established timeframe, the agreement stipulates that NJJ could in turn buy 49% of Millicom under similar price conditions. This arrangement gives both parties flexibility and allows them to make more informed decisions about business performance and the evolution of the Chilean market before establishing a final control structure.
Context: accelerated exit of Latin America
The sale of Telefónica Chile is part of a divestment rally in Latin America This activity has intensified since Marc Murtra took over as chairman of the group. This move adds to the deals completed in Argentina, Peru, Ecuador, Uruguay, and Colombia, which together exceed €3.000 billion in gross revenue, although net figures are lower due to adjustments and associated debt.
In Argentina, the company transferred its subsidiary to Telecom, a local competitor linked to the Clarín group, for an amount close to 1.190 millones de eurosIn Peru, it exited a business highly strained by debt to the local Treasury, selling the operator to the Argentine company Integra Tec for a symbolic amount, while assuming a significant volume of liabilities in the process.
Subsequently, Telefónica finalized the sale of its subsidiary of Ecuador to Millicom for around €329 million, and the Uruguayan operation, also from Millicom Spain, for approximately €389 million. The list was completed just a few days ago with the exit from Colombia, where the Luxembourg-based group acquired most of Movistar's assets in the country for around €182 million.
With the deconsolidation of these six subsidiaries (Argentina, Peru, Ecuador, Uruguay and now Chile), the Spanish group takes a decisive step towards its goal of reduce exposure to the region's regulatory and exchange rate volatilityIn the medium term, Telefónica aims to maintain Brazil as its main focus in the continent, while it finalizes its exit from more complex markets such as Mexico and, above all, Venezuela, where the economic and political environment makes any large-scale corporate operation difficult.
This geographical reconfiguration is complemented by other internal measures, such as a Employment regulation file in Spain for more than 4.500 workersA 50% dividend cut and the decision to delist from Wall Street to reduce operating costs. The underlying message is clear: prioritize financial strength, focus on markets considered strategic, and the ability to handle potential consolidation processes in Europe.
Impact on the Chilean subsidiary and the local market
Telefónica Chile was one of the crown jewels within the operator's Latin American operations. Despite recent years of competitive pressure and currency fluctuations, the company It maintained a positive EBITDA and a strong presence in the Chilean market., with around 1,38 million fixed broadband lines and about 8,5 million mobile lines.
Up to September of the last fiscal year, the subsidiary had registered revenues of approximately 1.071 billion euroswith growth close to 7% despite the headwinds of exchange rates. However, accumulated losses were around $120 million (approximately €83 million), reflecting investment pressure in networks and the competitive environment of the Andean country.
During the sales process, Several players expressed interest in Telefónica's assets in ChileAmong them were América Móvil, the group owned by Mexican businessman Carlos Slim, and Entel, which even explored a joint bid before dissolving their alliance. The alternative operator Wow, backed by investment funds, also entered the bidding, although ultimately the Millicom-NJJ consortium prevailed.
The Spanish company has emphasized that it is leaving Chile a modern telecommunications infrastructure and a robust operationTelefónica Hispam is ready for its new owners to continue driving the country's digital development. Alfonso Gómez, CEO of Telefónica Hispam, emphasized that the platform inherited by the purchasing consortium has a solid foundation in fiber optic and mobile network deployments.
Millicom, for its part, has described Chile as a strategic market with high demand for quality connectivity And it has argued that the structure of the transaction allows it to enter with limited initial exposure, isolating leverage and without recourse to the parent company. The Luxembourg-based company emphasizes that the alliance with NJJ gives them operational control from day one and the leeway to capture long-term growth opportunities at a valuation they consider attractive.
Assets that are excluded and balance sheet reinforcement
Although the agreement involves the sale of Telefónica's operating business in Chile, the operation does not include the ON*NET Fiber wholesale fiber networkThe platform, in which Telefónica held a 40% stake and the KKR fund a 60% stake. Prior to the closing of the transaction, an extraordinary shareholders' meeting approved the transfer of that 40% to another company within the group, which has allowed this asset to be separated from the sold portfolio.
The resources derived from that internal operation will be allocated entirely to reduce local financial debt and improve key solvency indicators from the Chilean company. With this, Telefónica seeks to strengthen its risk profile and preserve its capacity to sustain investments in networks essential for the country's digital development, even after the exit of its mobile subsidiary is completed.
Furthermore, the purchase agreement stipulates that the Spanish parent company must carry out an additional contribution of around 79.000 billion Chilean pesos (about 78 million euros), intended to cover certain payments and guarantee the stability of the balance sheet of the transferred company in the early stages of the new phase.
This type of clause is not uncommon in large infrastructure M&A transactions, where it is common for the seller to leave a certain cushion of liquidity in the cash of the transferred company so that it can meet commitments to suppliers, investments already committed or short-term liabilities without additional stress.
Meanwhile, Telefónica continues to advance its policy of active asset portfolio managementThis includes both selective divestments and potential acquisitions in key markets. In the UK, for example, the company, through its stake in Virgin Media O2 alongside Liberty Global, is negotiating the acquisition of Netomnia, the country's fourth-largest fiber network operator, in a deal worth around £2.000 billion.
Telefónica after the sale: focus on Europe and Brazil
Chile's departure comes at a time when the Spanish group is facing a profound process of internal transformationThe strategic plan presented last November includes a significant workforce reduction through a voluntary redundancy program, a substantial dividend cut, and a reorientation of the company towards higher value-added services, such as digital solutions, cybersecurity, and the cloud.
In the stock market, Telefónica's share price has behaved erratically in recent months, with cumulative drops of close to 20% since the plan was presentedAlthough there were slight, isolated recoveries coinciding with the announcement of some corporate transactions, the market reaction to the sale of the Chilean subsidiary has been subdued, with very controlled movements in the share price in the session following the announcement.
In terms of results, the divestments in Latin America have had a significant accounting impact. In the first nine months of 2025, the group was already recording losses exceeding €1.000 billion, partly due to the cost of the workforce reduction plan in Spain and to impairments and adjustments associated with exiting several countries in the region. At the same time, global revenues increased slightly, reflecting the best performance of the European and Brazilian markets.
The decision not to list on Wall Street is another symbolic gesture in this strategic shift. With this measure, Telefónica aims to simplify your reporting structure and reduce regulatory and administrative costs, concentrating its trading in European markets and reinforcing its profile as a value linked to the consolidation of the sector on the continent.
With the sale of its Chilean subsidiary now complete and most of its Latin American operations outside its core business, Telefónica faces the coming years with a very different business map than it had during the decades of maximum expansion in Latin America, trusting that this selective withdrawal will allow it to gain financial stability and room for maneuver for future opportunities in its reference markets.
Following this move, the Spanish group closes a key chapter in its international expansion and advances in a profound reconfiguration of its geographical presence and financial structureIt divests itself of one of its most valuable historical subsidiaries in Latin America, restructures its debt, strengthens its commitment to Europe and Brazil, and leaves Millicom and NJJ in charge of continuing to develop the telecommunications business in Chile under a new stage of shared control.