Telefónica Chile Considers Intra-Group Sale of ON Net Fibra Stake to Reduce Debt

Telefónica Chile Eyes Intra-Group Transfer for Debt Reduction

Telefónica Chile has announced it is evaluating the sale of its 40% stake in the fiber optic network joint venture, ON Net Fibra. The proposed transaction involves transferring the stake to Inversiones Telefónica Internacional Holding, an intra-group holding company. This strategic move is primarily aimed at reducing debt and bolstering the financial structure of Telefónica Chile.

The telecommunications giant confirmed that the central objective of this potential sale is to 'strengthen Telefónica Chile's financial structure by reducing its debt burden, improving its risk profile, and reinforcing credit fundamentals that will enhance its capacity to sustain strategic investments in networks and advanced services, thus moving toward a more balanced, sustainable, and robust operation for the future.'

Background of ON Net Fibra

ON Net Fibra was established in 2021 as a significant joint venture between Telefónica and global investment firm KKR. The formation of this entity saw Telefónica initially sell a 60% stake in its existing Chilean fiber optic network to KKR for approximately USD 1 billion, while retaining the current 40% share.

The joint venture operates as an independent and neutral wholesale open-access fiber optic network, a pioneering model in Chile. Its mission is to accelerate the deployment of fiber optic infrastructure across the country, with an ambitious goal to reach 4.3 million homes passed by 2024.

Broader Strategic Context

This evaluation aligns with Telefónica's wider corporate strategy to optimize its asset portfolio and reduce its overall debt. The parent company has been actively engaged in divesting non-core assets and restructuring its presence in various Latin American markets, with the exception of Brazil.

Telefónica Chile has faced considerable financial pressures and intense competition within the Chilean telecommunications market. The proposed intra-group sale is seen as a mechanism to improve the unit's financial health and potentially make it more attractive for future strategic considerations, although the company has not explicitly stated any market exit plans for its Chilean operations.