Telefónica SA is considering selling its subsidiary in Ecuador, which is valued at between €600 million and €800 million, Telecompaper reported, citing sources mentioned by El Economista.
Possible bidders for the business reportedly include Luxembourg-based Millicom International Cellular SA and Entel Chile. Telefónica, however, has yet to start negotiations with potential buyers.
While the Spanish telecom giant may convince Millicom to purchase its mobile-centric Ecuador unit, a potential deal-breaker could be the lack of wireline assets in the business, according to a report from Fitch Solutions.
The report added that Entel Chile could bid for Telefónica's Ecuador assets as part of a regional expansion to offset weakening operational growth in its home market.
Fitch Solutions also said Telefónica could divest its operations in Uruguay next. The telco may include the sale of the business in its negotiations with Entel Chile, since Millicom is unlikely to be interested due to a lack of opportunities for convergence.
Telefónica has been divesting assets to reduce debt and concentrate on its core operations. The company sold its businesses in Guatemala and El Salvador to América Móvil SAB de CV, while its operations in Panama, Costa Rica and Nicaragua will be purchased by Millicom. The telco also sold 11 of its data centers to pan-European infrastructure fund manager Asterion Industrial Partners.
Fitch Solutions is a unit of financial information services firm Fitch Group Inc.
