Telefónica capitalises Colombian unit to settle debts and fine
Telefónica and the Colombian government will raise €1.37bn to pay off debts whilst also settling a €472 million fine over mobile network infrastructure
Telefónica has struck a deal with the Colombian government to increase the capital of subsidiary Colombia Telecomunicaciones by around €1.37 billion in order to pay off some of its debts.
Coltel, which is 67.6%-owned by the Spanish operator and 32.5% owned by the Colombian government, will also use some of the capital to pay off a fine linked to a local dispute.
Telefónica's capital injection into the Colombian unit, formed when the state-owned ColTel was merged with Movistar Colombia in 2012, will be worth around €925 million, the operator said, and will settle its debt owed to asset management firm Parapat.
The remaining capital has been earmarked to pay off a €472 million fine which was levied following a dispute with Colombia over local networks and infrastructure. Last month, an arbitration panel found both ColTel and America Movil’s Colombian unit had failed to return installed telecoms networks and infrastructure, despite agreements to provide mobile services which dated back to 1994.
Telefónica said that whilst it will meet the payment, costing it around €318 million, with the rest paid by the government, it still does not agree with the arbitration award.
In a statement, the Spanish operator said: “However, the execution of the payment does not imply that the Company agrees with the content of the arbitration award; Telefónica reiterates its disagreement with it, considering it not adjusted to law, unfair, disproportionate and arbitrary. In this sense, Telefónica reserves all of its legal rights and the exercise of any applicable legal action, national or international.”
America Movil also said it has complied with the arbitration panel ruling, which ordered its Colombian unit Comcel to pay $1.08 billion for the assets, despite also objecting to its findings.
“COMCEL will exhaust every national and international available legal action to challenge the arbitral award,” the company said.