Oi ‘open to all options’ as Brazilian merger speculation intensifies

26 Jan 2015

Brazilian telco Oi SA has indicated that it is open to all options with regards to anticipated consolidation in the domestic mobile market. Following last week’s shareholder approval of Oi’s agreed EUR7.4 billion (USD9.2 billion) sale of its Portuguese operating unit PT Portugal Telecom SGPS (PT Portugal) to Altice Group of Luxembourg, the Brazilian firm has the financial muscle to look for deals in its domestic market. Reuters quotes Oi CEO Bayard Gontijo as saying: ‘Oi has no prejudices about the structure of a deal. It is too early to discuss whether we’d be in control of anything and we still need to see how conditions for a deal evolve.’ The comments have been interpreted as signifying a shift in Oi’s stance, as Gontijo previously stressed that the company wanted to spearhead consolidation in Brazil’s telecoms market, with TIM Participacoes (TIM Brasil) named as the most likely target.

However, in a separate development, the management team from Telecom Italia (TI), TIM Brasil’s controlling shareholder, plans to meet with Brazilian government officials this week to establish whether or not to turn the tables and make its own counter-bid for Oi. According to sources with knowledge of the plan, TI CEO Marco Patuano will seek assurance from Brazilian communications minister Ricardo Berzoini that the government would not oppose a possible bid for Oi.

As previously reported by TeleGeography’s CommsUpdate, in late October 2014 local media reports suggested that Oi, Telefonica Brasil (Vivo) and Claro Brasil had agreed to place a bid for TIM Brasil. While the accord between the three companies had not been finalised at that stage, the telcos had reportedly agreed in principle to pay BRL31.5 billion (USD12.2 billion) for TIM Brasil, a price which represented a 5% premium on its then-share price. Under the terms set out by the initial agreement, Claro would retain 40% of TIM Brasil’s business, with Oi taking 28% and Telefonica securing the remaining 32%.