Telefonica and TIM Unite To Acquire Bankrupt Brazilian Telco's Mobile Unit

Stephen L Kanaval  |

Source: Telefonica

Telefonica and TIM have come together to make a united offer to acquire bankrupt Brazilian telecom Oi's mobile unit.

The future of Brazil's fourth-largest telco, Oi, has been precarious for some time. The company filed for bankruptcy in 2016 and, despite various debt restructurings, remains on the ropes. Today's news confirms reports that Oi was looking to sell assets to improve its financial position. Telefonica, the Brazilian subsidiary of Spain's Telefonica SA, and TIM, which is controlled by Telecom Italia SpA, informed Oi's financial advisor Bank of America Merrill Lynch of their interest in starting negotiations for a potential acquisition of all or part of Oi's mobile division.

TIM Brasil said in a statement that the acquisition would not only create value in its own business, but also "bring benefits to the telecommunications market in general, reinforcing its competitiveness and investment capacity." If their bid is successful, the two companies will divide up Oi's mobile business, the filings showed.

Vivo, which is owned by Telefonica, is already the largest mobile operator with nearly a third of customers in Brazil, while TIM is tied for second with Claro with around 24 percent, according to data collected by Brazil's National Telecommuting Agency (Anatel). Claro, owned by America Movil, recently strengthened its position with the acquisition of the small mobile operator Nextel. Oi holds a 16 percent share and around 37 million mobile customers.

According to reports in Telecompaper, Oi will focus on the divestment of its non-core assets, such as towers, as well as its 25% stake in Angolan operator Unitel.

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Source: Equities News

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