Tigo-Une/Millicom Capitalization Deal Avoids Bankruptcy

Medellin-based Tigo-Une – Colombia’s third-largest cell-phone, internet and cable-TV network, half-owned by Medellin utilities giant EPM – announced late last night (October 4) that it finally reached a deal with its partner — Luxembourg-based Millicom — to capitalize Tigo-Une and thus avoid an October 11 bankruptcy deadline.

Under the deal, EPM will put COP$300 billion (US$69.4 million) in fresh capital into Tigo-Une, with 50% paid this month and the other 50% in December. Millicom likewise will put COP$300 billion (US$69.4 million) into the venture this month, avoiding a crisis.

The capitalization decision by EPM’s board of directors “will be carried out under the following conditions agreed with Millicom:

“1. Capitalization must be carried out with [Tigo-Une] shares value at market value (as recognition of a going concern);

“2. The return of resources will be made by one of the following mechanisms: a) reacquisition of shares by UNE [or] b) if the above is not achieved, then EPM will exercise a PUT Option (mandatory purchase of Millicom) at a share value agreed between the parties;

“3. Extend a patrimony protection clause until December 2026,” when Millicom eventually could buy-out EPM’s share in the venture.

“EPM will have the option to choose — within a maximum period of one year — between the execution of the public-assets protection clause and the mandatory purchase option by Millicom (PUT Option).

“With this decision, the EPM board of directors ratifies its commitment to the search for alternatives to ensure the viability of Tigo-UNE and the well-being of all its stakeholders,” EPM concluded.

Tigo-Une has been a money-losing proposition for EPM for years, as Colombia’s competitive cell-phone market requires huge, continuing capital investments in infrastructure and broadcast spectrum – plus additional investments required to enable upcoming “5G” technology.

Tigo-Une earlier inked a cooperation deal with Spain-based Movistar to share the costs of “5G” upgrades. That move has raised speculation about some possible, future merger deal between Movistar and Tigo-Une.