América Móvil, the telecommunications giant headed by Carlos Slim, and Telefónica have entered into a non-binding agreement to explore the potential joint acquisition of assets owned by WOM, a Chilean telecom operator. The two telecom giants are examining the possibility of purchasing WOM's operations and its affiliated companies in Chile. This move comes as WOM continues to navigate its financial difficulties, having reorganised its executive structure and reached an agreement with its creditors. This agreement was approved by the Delaware Bankruptcy Court, allowing WOM to proceed with its financial reorganisation without disrupting its ongoing business activities.
WOM, once a promising Chilean startup, filed for bankruptcy after failing to refinance $348 million in debt. The company sought Chapter 11 bankruptcy protection in the United States in April 2024 as part of its debt restructuring efforts. Since then, it has remained under significant financial pressure.
América Móvil and Telefónica highlighted the potential benefits of acquiring WOM’s assets, particularly for their customers and the broader Chilean market. They believe that this acquisition could strengthen the sustainability of Chile's telecommunications sector by enhancing the capacity for further investments in high-speed networks and improving coverage—critical components for the country’s digital future.
Given that this is a non-binding agreement, both companies retain the flexibility to withdraw from the process at any time. Should they decide to proceed, any offer made would be subject to stringent bidding procedures and would require compliance with Chile's regulatory standards, including approval from the relevant competition and sector-specific authorities.
WOM's financial troubles have been significant. After filing for Chapter 11 in April, the company sought to restructure its debt while continuing its operations. In June, WOM reached a pivotal agreement with its creditors, which include major entities like Phoenix Tower International, American Tower, U.S. Bank, and others. This agreement outlined steps for WOM to emerge from its reorganisation, including the possibility of selling assets through various methods such as bidding, auctions, or the selection of purchase offers for most or all of its assets.
América Móvil emerged as a key player interested in this process, with its CEO, Daniel Hajj, expressing openness to exploring potential opportunities during a conference call in July, where he discussed the company’s second-quarter financial results.
The timeline for this potential transaction is tight. Expressions of interest from potential bidders for WOM's assets are due by 9th September, with WOM expected to select a minimum offer price by 18th October. Binding offers will need to be submitted by 15th November. This process underscores the high stakes involved as América Móvil and Telefónica consider whether to cement their presence in the Chilean market through the acquisition of WOM's assets.
