NEW YORK/FRANKFURT (Reuters) – Liberty Latin America Ltd (LILA.O), a wireless and cable operator in South America and the Caribbean, has approached peer Millicom International Cellular SA (TIGOsdb.ST) with an acquisition offer, people familiar with the matter said on Monday.

The deal would create one of the largest telecommunications carriers in Latin America, giving the combined company more heft to compete with some of the biggest players in the region, such as America Movil (AMXL.MX), Telefonica SA (TEF.MC) and AT&T Inc (T.N).

Liberty Latin America, which is backed by U.S. media and telecommunications mogul John Malone, has been in talks with Millicom, a cable and mobile telephone operator in Latin America and Africa, about a deal for several weeks, and there is no certainty any agreement will be reached, one of the sources added.

In addition to borrowing from banks, Liberty Latin America is considering raising financing from an investment firm, such as a private equity fund, for the cash portion of its bid, another of the sources said.

The sources asked not to be identified because the matter is confidential. Liberty Latin America and Millicom did not immediately respond to requests for comment.

Millicom shares jumped 8 percent to $72.10 on the news in New York on Monday, giving the company a market capitalization of close to $7 billion. Liberty Latin America shares rose 2 percent to $16.98, giving it a market value of $3.1 billion.

Were the deal to happen, it would signify the importance of scale in the Latin American telecommunications market. Inflation, currency fluctuations, corruption and political instability are just some of the challenges facing operators in the region.

Millicom offers mobile services to approximately 51 million customers under the brand Tigo, in nine Latin American countries and the African countries of Chad and Tanzania. Swedish investment company Kinnevik AB (KINVb.ST) had 37.2 percent voting control over Millicom as of the end of December. Kinnevik has been trimming its wireless tower portfolio around the world.

Millicom is listed in Stockholm but also started trading on the Nasdaq earlier this month.

Liberty Latin America, which operates in more than 20 countries across Latin America and the Caribbean, was spun off from Malone’s Liberty Global Plc (LBTYA.O) last year. Its consumer brands include VTR, Flow, Liberty, Más Móvil, BTC and Cabletica.

Malone is the largest shareholder of Charter Communications Inc (CHTR.O), the second largest U.S. cable company. He controls about a quarter of the voting power in Liberty Latin America.

Reporting by Liana B. Baker in New York and Arno Schuetze in Frankfurt; Additional reporting by Pamela Barbaglia in London; Editing by Nick Zieminski and Steve Orlofsky



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