KKR To Buy $1B Stake In Telefónica Chile’s Fiber Network

KKR & Co. has entered into an agreement with Telefónica to acquire a majority stake in Telefónica Chile’s existing fiber optic network for about $1 billion and make it an open access network. The deal is expected to close in the first half of 2021. Shares rose 1.4% in Monday’s extended trading.

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Per the agreement, KKR (KKR), a global investment firm, formed an independent Chilean company and created the first open access network to serve telecom operators in Chile. Telefónica will own a 40% stake in the newly formed company.

The company said that, “Upon approval, the new business plans to expand broadband coverage in Chile from 2 million households today to a minimum of 3.5 million households by 2023, and to provide wholesale service to more than 40,000 businesses, telecom towers, and small cells.” (See KKR & Co. stock analysis on TipRanks)

On Feb. 10, BMO Capital analyst James Fotheringham raised the stock’s price target to $72 (59% upside potential) from $54 and maintained a Buy rating. Fotheringham remains upbeat on KKR’s “meaningful excess capital”.

Meanwhile, the Street has a bullish outlook on the stock, with a Strong Buy consensus rating based on 9 Buys and 3 Holds. The average analyst price target of $53.05 implies upside potential of about 17% from current levels. Shares have gained about 39.1% over the past year.