TIM Brasil hires Bradesco to analyse bid for Oi

6 Oct 2014

Brazil’s TIM Participacoes (TIM Brasil) has hired Banco Bradesco’s investment banking unit to analyse a potential bid for rival Grupo Oi, Reuters reports, citing a source with knowledge of the situation. According to the source, Telecom Italia (TI), TIM’s controlling shareholder, intends to use TIM as a vehicle to acquire all or part of Oi’s assets ahead of an eventual purchase. The news agency notes that Bradesco acted as one of TIM’s advisers in its recent failed bid for Brazilian broadband provider GVT, which was eventually acquired by Spain’s Telefonica. According to TeleGeography’s GlobalComms Database, TIM is the country’s second largest mobile operator by subscribers with a 26.6% market share, while Oi is ranked fourth in terms of end users (18.3%).

TeleGeography notes that the move represents the latest twist in the ongoing consolidation saga in the Brazilian telecoms sector. In August this year, Oi hired Grupo BTG Pactual to review its options ‘with the purpose of enabling a viable proposal for the acquisition of the shares of TIM’. BTG Pactual wanted to include mobile market leader Telefonica (28.5% market share) in a joint bid for TIM, but Telefonica opted not to pursue that course of action, in light of its acquisition of GVT.

Running in parallel, America Movil (AM) chief financial officer Carlos Garcia Moreno confirmed his willingness to work with Oi on a possible joint bid for TIM Brasil, declaring that financing a deal for TIM Brasil would not be a problem. AM currently owns Claro Brasil, the country’s third largest mobile operator by subscribers (24.7% market share).

TeleGeography notes that any transaction involving Oi is likely be complicated by the telco’s existing shareholder pact with Portugal Telecom (PT). In October 2013 the two companies announced that they would combine their operations to form a new Brazil-based company in order to strengthen the Brazilian firm and simplify its ownership structure, while also helping to shore up PT’s operations in its domestic market.