Telefónica’s planned sale of its Peruvian fiber optic network to private equity firm, KKR, and Chilean telecom operator, Entel, has fallen through, marking a significant setback in the Spanish telecom’s efforts to streamline operations and reduce debt.
The deal, which had been under negotiation for over a year, was initially announced in July 2023. It proposed that KKR and Entel acquire 54% and 10% stakes in the network, respectively, with a total business valuation of approximately EUR 550 million, including debt.
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The joint venture, referred to as On Net Fibra de Perú, was set to establish the first independent open-access wholesale fiber optic network in Peru, with KKR aiming to expand its coverage to 5.2 million by 2026.
The deal received approval from the Peruvian competition regulator in September, clearing the way for its progression.
However, Entel revealed the collapse of the negotiations in a regulatory filing, citing unmet closing conditions.
“Pangea has communicated that, due to the failure to comply with certain closing conditions stipulated in the SSA (in reference to the agreement), related to a parallel transaction between KKR and Telefónica Hispam regarding Pangea that will not materialize, Telefónica Hispam has expressed its intention to formally document the termination of the SSA. To date, the parties to the SSA are in discussions regarding the terms and conditions of said termination,” explained Entel in a statement.
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Telefónica intended to use the proceeds from the sale to reduce its debt by EUR 200 million, as part of its broader strategy to divest non-core assets and focus on key markets such as Spain, Brazil, and Germany.
In recent years, Telefónica has actively sold various assets, including its tower businesses and shares in fiber ventures across Europe and Latin America, in an effort to manage its EUR 26 billion debt and free up capital for investments in 5G and digital infrastructure in priority markets.
KKR, with a track record of investing in critical telecom infrastructure—most recently in Telecom Italia—has also partnered with Telefónica in fiber-related ventures, including the acquisition of its Chilean wholesale fiber optic network in 2021.
