Millicom is edging closer to merging its Colombian operations with Telefónica's local business in the country.

Millicom's subsidiary in Colombia and local utility Empresas Públicas de Medellín (EPM) recently reached an agreement for the sale of shares held by EPM in ColTel, which would represent a step forward in the integration plans of Tigo-UNE and ColTel, which operates Movistar Colombia.

Under the terms of the agreement, Millicom has committed to submit an offer in line with EPM's proposal, in which EPM set a minimum price of 418,741 Colombian pesos per Tigo-UNE share, which would mean a total disbursement of approximately $520 million.

The agreement contemplates legal protections for EPM to maintain its exit rights if the process were to fail due to external causes. Should EPM remain a shareholder in the face of this scenario, EPM has agreed to consent to the proposed future merger between Tigo-UNE and ColTel, subject to certain closing conditions.

"This agreement marks an important milestone for Millicom's strategy in Colombia," said Marcelo Benítez, chief executive officer of Millicom. "We are moving forward with determination on our integration plans, while reaffirming our commitment to long-term investment in Colombia's digital ecosystem and infrastructure."

Telefónica's Movistar entered Colombia in 2004. Millicom reached an agreement with Telefónica in March of this year to acquire a 67.5 percent stake in ColTel for $400 million.

The Luxembourg company also intends to buy the remaining 32.5 percent of the teleoperator owned by the Colombian state and other minority shareholders, at the same price per share that it agreed with Telefónica.

The process still has to pass regulatory reviews. Although the Ministry of Information and Communications Technologies recognizes that the merger would create a more robust operator with better mobile and fixed coverage, it has also demanded conditions to safeguard competition.

Telefónica has more than 24 million customers in Colombia, while Tigo is the third largest operator in the country with 15 million users.

This piece was automatically translated from DCD's Spanish site and edited by a member of DCD staff.