TIM, Telefonica and Claro submit bid to buy mobile business from Oi

Telecom Italia (TIM) in partnership with rivals Telefonica Brasil (Vivo) and Claro has submitted bid to buy mobile business from Oi.
Oi Brazil networkBradesco BBI estimates that the worth of Oi’s mobile business will be at least 12 billion reais or $2.6 billion.

TIM, Vivo and Claro aim to receive a portion of the mobile assets from Rio de Janeiro-based Oi if a deal is reached.

Oi said there was a second offer. It declined to comment further. Reuters report said Oi has received bid from a foreign strategic player with a small presence in Brazil.

Oi will not choose the winner based solely on price but will also consider which group could secure regulatory approval for the deal faster, especially in terms of market concentration.

Oi in a separate statement said it received a 1.08 billion-reais or $200.59 million offer for its tower unit from Highline do Brasil II Infraestrutura de Telecomunicaçoes S.A.

The Brazilian carrier set a minimum price of 15 billion reais or $2.79 billion for its mobile assets. The company intends to use the proceeds of asset sales to fund its growing broadband fiber unit and pay off debt, aiming to exit bankruptcy protection. It was not clear if the offers met the minimum price.

Oi, Brazil’s largest fixed-line carrier had approximately 65 billion reais ($12.65 billion) of debt when it filed for bankruptcy protection.

Oi, Brazil’s largest fixed-line carrier, has struggled with losses and heavy debts for years and is in the final stages of a $19 billion debt restructuring. It raised some much needed cash in January by selling its 25 percent stake in Angola’s Unitel SA for $1 billion, Bloomberg report said last year.

Oi made revenue of 5.24 billion reais or $1.13 billion in the first nine months of 2019. Some analysts see a consolidation of Brazil’s wireless sector as a potential catalyst for share prices to rise.

Oi has been struggling to turn around its business since filing for bankruptcy protection in June 2016 to restructure approximately 65 billion reais of debt, Reuters reported.

Brazil’s largest fixed-line carrier expects to raise more than 10 billion reais or $2.4 billion by selling its mobile operations. Oi reported some 35 million mobile clients in its most recent earnings.

Oi aims to use proceeds from the sale to boost fiber-to-home (FTTH) broadband service, considered key to the company’s growth, according to its strategic plan in July. Oi currently has 223,700 miles (360,000 kilometers) of fiber in Brazil and its infrastructure is also used by other carriers.

Fitch earlier calculated that Oi is likely to face a shortage of 7 billion reais through 2021 due to intensive capital spending. “Oi depends on assets sales and short-term regulatory changes to finance its transition to a sustainable business model,” the rating agency noted.