Millicom is initiating a restructuring plan at its newly acquired Chilean operations, formerly part of Telefónica, that includes a significant workforce reduction. The move comes less than two weeks after the multinational completed its purchase of Telefónica’s Chilean assets for over $1.2 billion.
According to multiple internal sources, approximately 700 employees of Movistar, as Telefónica’s Chilean brand is known, are being laid off. The figure represents roughly 20% of Telefónica’s 3,000-person workforce in Chile, which, as of 2024, included 16 high-level managers, 173 in management positions, and 208 team leaders.
Millicom CEO Marcelo Benítez signaled the potential for cuts during a recent investor conference. “Our playbook fits very well with the operations in the country and we are becoming very good at executing it,” he said. “In just two weeks we have appointed a new CEO (Carolina Vallejo), CTIO (Charbel El Hachem) and CFO (Paul Proaño). And we are currently executing the reduction of operations in Chile.”
The company has a track record of streamlining operations after acquiring Telefónica assets in other Latin American countries. Benítez detailed the approach, stating, “We have acted quickly to stabilize and integrate the newly acquired businesses in Uruguay and Ecuador. On the first day of the acquisition, we appointed a new CEO, a new CFO and a new CTIO. During the first week, we redesigned the executive team and their direct reports. And during the first month, we applied our action plan with discipline, which included a 30% reduction in headcount.”
The process of notifying affected employees began on February 25, 2026, and is expected to continue as some staff are currently on vacation. Estimates suggest the total number of job losses could range from 800 to 1,000, representing 25% to 30% of the Chilean workforce.
Approximately 400 employees are currently protected from layoffs due to ongoing collective bargaining negotiations with their union. This protection, and associated labor rights, could extend for a few more months, potentially increasing the total number of job cuts once the negotiations conclude.
Sources within the company indicate that severance packages are being offered with favorable terms, including an additional 20% on top of standard indemnification for newer employees and up to 45% extra for long-tenured staff whose contracts guarantee such benefits.
Telefónica Chile reported a loss for the third consecutive year in 2025, with a red balance of $412.625 million (US$455 million).
Despite recent losses, Millicom anticipates a turnaround. “Despite losing money every day in Chile today, we believe we can bring the operation to a cash flow neutral position this year. And from then on, reap the benefits of the new execution, with a new operating model,” Benítez projected.
Millicom’s Strategy in Chile
Millicom explained its decision to enter the highly competitive Chilean market to investors, highlighting the country’s strong macroeconomic stability and investment levels. The CEO noted that “Chile is a sophisticated market, with clear operational advantages. Applying our strategy, we see a path to stabilization and performance improvement.”
“It’s a luxury for us to be in Chile. Its macroeconomy is strong and This proves a country with investment grade. We believe in Chile’s long-term prospects. But yes, it is a competitive environment, a very fragmented market,” Benítez added.
Millicom emphasized the strength of the Movistar brand, which holds the leading position in fixed internet and is second in mobile services. “We believe that in the long or medium term there will be market consolidation, but that is not the main reason we entered Chile,” Benítez remarked.
The acquisition of Telefónica’s operations in Chile is part of a broader trend, with Millicom having acquired similar assets in Uruguay, Ecuador, and Colombia over the past year.
Analysts have expressed concerns regarding Millicom’s increasing debt levels. However, CFO Bart Vanhaeren provided guidance, anticipating a rise in leverage during the first half of 2026, followed by a reduction to 2.5 times EBITDA by year-end.
Regarding the Chilean acquisition, Vanhaeren stated, “Do we believe we are going to do well in Chile? Yes, absolutely, but I don’t wish to bet everything on that.” The company structured the purchase with Millicom holding 49% and NJJ Holding, the investment vehicle of French businessman Xavier Niel, holding 51%, allowing for a potential future acquisition of the remaining stake.
“I hope we talk about advantages in the future (of Chile’s operations) and not about risks in the financial statements. I think we are at a point where we experience comfortable with the leverage (debt), including the acquisition of Coltel. From there, I want to see a reduction in leverage before doing other things,” Vanhaeren said.
When asked about future growth opportunities, Vanhaeren ruled out entering the Mexican and Brazilian markets, stating, “Those are not markets for us.” The company also dismissed the possibility of entering Argentina, given recent market developments. Peru and Venezuela were identified as potential future acquisition targets.
