Telefónica and América Móvil have signed a non-binding agreement to potentially purchase assets from WOM Chile.

WOM filed for Chapter 11 bankruptcy protection earlier this year, listing debts of more than $1 billion.

Both telcos announced the agreement via a joint statement, which notes that the two carriers wish to explore the acquisition of assets from WOM, following its US bankruptcy filing.

Further information about the specific assets being explored was not disclosed.

"The interest of both companies in jointly exploring their potential participation in the sale process of the assets of WOM S.A. and its affiliates in Chile is based on the potential benefits that the transaction could generate for its clients and Chilean consumers in general, given that it would strengthen the telecommunications sector sustainability," read the statement.

There's no guarantee that either carrier will definitively submit an offer, the two telcos added.

At the time of WOM's bankruptcy filing, then-CEO Chris Bannister said that the telco sought Chapter 11 protection in a US bankruptcy court as the company's best option to remain viable. Bannister left the company a week later.

WOM blamed its financial problems on its delayed 5G rollout, while credit rating companies downgraded WOM's debt early last year, including 2024 and 2028 bonds totaling $649 million.

Founded in 2015 after British private equity firm Novator Partners LLP acquired assets of Nextel Chile, the telco has become Chile's third-biggest in market share, only behind Telefónica's Movistar and Entel SA. América Móvil operates in the country through Claro.

It serves more than eight million customers and employs around 7,000 people.