Oi agrees seven-month exclusivity with Fridman’s LetterOne

2 Nov 2015

Rio de Janeiro-based Oi has confirmed that it intends to explore in-market consolidation opportunities with Luxembourg-based LetterOne Holding. In an announcement to its shareholders Oi notes that, following the European firm’s initial interest, it issued a counter-proposal and the two parties have now granted each other a mutual right of exclusivity for a period of seven months (commencing 23 October 2015). Oi clarified that the exclusivity relates to ‘business combinations involving companies or assets in the Brazilian telecommunications sector’.

Last week TeleGeography’s CommsUpdate reported that LetterOne, which owns a controlling 47.9% stake in Vimpelcom of Russia, had contacted Oi with a surprise investment proposal. LetterOne, which is ultimately controlled by Russian billionaire Mikhail Fridman has offered to inject up to USD4 billion into Oi, on the proviso that it merges with domestic rival TIM Participacoes (TIM Brasil), which is currently 67%-owned by Telecom Italia International. Oi’s latest statement adds: ‘A potential business combination of Oi and TIM Participações should result in the creation of a more complete and well-positioned telecommunications operator that would be able to compete against global players already operating in Brazil’.

If realised, a merger between TIM Brasil and Oi would create the largest wireless operator in Brazil in terms of subscribers. According to TeleGeography’s GlobalComms Database, as at 30 June 2015 the pair claimed 26.2% and 17.7% of the mobile market respectively, and would leapfrog market leader Telefonica Brasil (Vivo, 29.1%) and Claro Brasil (25.0%) if they combined.

Brazil, LetterOne Holding (L1 Technology), Oi, Telecom Italia (TIM), TIM Brasil, VEON