Colombia terminó de socia del polémico fondo KKR en el negocio de fibra óptica

In a move by Luigi Echeverri on behalf of the Duque government, Telefónica Colombia sold its stake and ON*NET Fibra, managed by Ximena Mora, was set up.

ColTel’s existing fiber optic infrastructure, which reaches 1.2 million homes in 50 cities and towns, became part of a new joint venture, Madrid-based Alamo HoldCo in which KKR owns a 60% majority stake and ColTel the remaining 40% and that in Colombia it will operate as On*Net.

The business move was approved at the board of directors last July in which Luis Guillermo -Luigi- Echeverri has a patrimonial seat on the part of the government. The financial superintendence confirmed the operation this January and On*Net is headed by Ximena Mora Méndez

The new partner of the Colombian government is Kohlberg Kravis Roberts – KKR, an American multinational investment fund manager and venture capital company founded in 1976, whose history has included three books and a television series.

KKR partners Jerome Kohlberg, Henry Kravis and George E. Roberts, who came from investment banking Bear Stearns, are widely known as the pioneers of leveraged buyouts (the practice of acquiring businesses using lots of debt and a portion of capital), and in its particular way of entering the properties of the companies through the “hostile takeover bid”, a term used to define the non-negotiation, or agreement, between the offering company and the one trying to be absorbed, that the Gilinski Group has made fashionable in Colombia with its attempts to acquire the GEA.

KKR partners Jerome Kohlberg, Henry Kravis and George E. Roberts

KKR rose to prominence during the junk bond boom years of the 1980s by buying companies like Duracell and Nabisco. The title of “barbarians” was coined by the US press due to one of the books, Barbarians at the Gate: The Fall of RJR Nabisco (in Spanish, Barbarians at the gates) where the most controversial case is recounted, when the partners from KKR in 1989, they acquired tobacco and biscuit specialist RJR Nabisco for $25 billion, putting up just $15 million of their own capital, making it the largest leveraged buyout in history. The book was made into a television series on HBO in 1993, starring James Garner and received a Golden Globe Award.

Little by little, Henry Kravis and George R. Roberts, two of the three founding partners of the firm, changed their tactics, while Jerome Kohlberg Jr., the third executive who had retired since 1987, was in favor of a less risky strategy. The company has changed its profile over the years, in 2010 it was listed on the New York Stock Exchange and four years later it opened offices in Madrid where it acquired a minority stake in Telefónica in 2017.

In October of last year, Henry Kravis and George Roberts left their positions as co-CEOs of the firm to Joseph Bae and Scott Nuttall. Its market value is approximately USD 42,437 million.

Ximena Mora Méndez, CEO of ON*NET Fibra Colombia, which began operations in January of this year

HoldCo will operate in Colombia under the name of ON*NET Fibra Colombia SAS, a new company that is starting up valued at USD 500 million and that aspires to deploy and offer fiber optics to the home FTTH (Fiber-to-the-home) plus other associated services to some 90 cities in Colombia over the next three years, to reach at least 4.3 million homes by the end of 2024.

The objective of the Colombian Government, owner of approximately 32.5% in ColTel and therefore almost 13% of ON*NET Fibra Colombia SAS, is to increase the number of connected homes and improve the speed of connectivity in the country, in order to advance plans to eliminate inequalities in digital transformation.

On the part of Telefónica Hispanoamérica, they are money that will be used in its entirety for debt prepayments. Telefónica Spain, owner of Telefónica Hispanoamérica and the Movistar brand, has been engaged in a divestment strategy for almost ten years to reduce debt and increase its financial flexibility; Along these same lines, Telefónica also sold 60% of the Chilean subsidiary to KKR for around USD 800 million and in August completed the sale of Telefónica Costa Rica’s operations to Liberty Latin America.

Telefónica is a partner of the Colombian government, since 2006 when it bought 51% of Colombia Telecom. Although it began as a state company in 1924, today it is completely private with more than 1.2 million shareholders and is listed on the Spanish, US and Peruvian stock markets.

The main shareholders are from the financial sector, Banco Bilbao Vizcaya with 4.99%, followed by CaixaBank with 4.49% and Blackrock Inc. with 4.48%. The president of the Telefónica Group since 1999 is José María Álvarez-Pallete, who was previously president of Telefónica Latin America. The market in Latin America represents 20% of its income.

For the sale of the fiber optic assets that gave Colombiana Telecomunicaciones an initial payment of USD 320 million, an adjustment was made on February 17 for another USD 166 million. Similarly, it was indicated that it could receive a higher income for its result in network deployment activities, of which USD 66.7 million were approved.

Alfonso Gómez Palacio, CEO of Telefónica Hispanoamérica

ON*NET Fibra, being an independent company, will provide neutral fiber optic services to the home FTTH to all operators in the telecommunications market, which makes it the largest open and neutral network in the country. Movistar, for obvious reasons, is the first client of ON*NET Fibra, and immediately began to use the network for its 450,000 clients throughout the country.

The planned expansion, which implies an investment plan of approximately 850,000 million Colombian pesos (USD 215 million) until 2024, will allow, according to the executive director of Telefónica Hispanoamérica, Alfonso Gómez Palacio, a deployment of fiber optics at an unprecedented rate in the country.