Luxembourg-based Millicom becomes largest foreign investor in Guatemala

Millicom, a Luxembourg headquartered company that sells mobile and broadband services in Latin America and Africa, said on November 11 that it will buy out its venture partner in Guatemala and take full control of its operations.

The $2.2 billion deal is the largest-ever single foreign investment in the Central American country. Previously, Millicom owned 55 per cent of its Guatemala operation. The deal sees Millicom take sole control of the venture after buying out its partner, Panama-based Miffin Associates, which is controlled by Guatemalan billionaire Mario Lopez Estrada. 

The deal is larger than the total annual foreign direct investment in Guatemala for any year since 1970. A group of international banks will provide bridge financing for the deal, which would then be refinanced by debt and a new equity rights offering in the first quarter of 2022, Millicom said.

The move is expected to boost free cash flow to equity by about $200 million this year, giving it more exposure to a developing country that has a stable economy and currency, said Mauricio Ramos, Millicom’s chief executive.

Millicom’s brand in Guatemala, Tigo, is the largest mobile provider in the country, ahead of Mexican billionaire Carlos Slim’s America Movil.

“We see them on the street every day, fighting for every single consumer out there,” Ramos said of his competitor. “We certainly hold our own and we will continue to do so.” 

Guatemala’s gross domestic product is expected to grow 5 per cent this year. The country has a population of about 18 million and the largest economy in Central America, according to the World Bank. The country, however, suffers from a low quality of life with more than 45 per cent of its people living in poverty. 

Earlier this year, Millicom said that it would sell its remaining African operations to shift to focus squarely on its nine markets in Latin America, however, that sale is still subject to regulatory approvals. 

With the US encouraging development in the country – in the hope that it discourages illegal migrating north – the purchase is being received as a strong vote of confidence in the economy of Guatemala.

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