Italian incumbent Telecom Italia (TI) is reportedly considering a bid for Brazil’s fourth-largest mobile operator Oi.
TI has contacted advisers to discuss the possibility of acquiring Oi, which has a market value of R$14.2bn (US$6.1bn) via its…
Italian incumbent Telecom Italia (TI) is reportedly considering a bid for Brazil’s fourth-largest mobile operator Oi.
TI has contacted advisers to discuss the possibility of acquiring Oi, which has a market value of R$14.2bn (US$6.1bn) via its Brazilian unit TIM Brasil, according to a Bloomberg report citing three people familiar with the matter.
Any potential buyer would also assume Oi’s US$20bn in net debt, the report noted.
In a statement later today, TIM said that Telecom Italia had informed it there were no ongoing discussions regarding a possible deal with Oi.
Such an acquisition would allow the Italian incumbent to scale up its Brazilian operations and better prepare it to face competition from rival Telefonica, which last month outbid TI in the race to acquire Vivendi’s Brazilian broadband unit GVT.
At the end of August, Oi, which also operates an extensive fixed-line network, mandated BTG Pactual to advise on the potential acquisition of TI’s 67% stake in TIM Brasil.
In a notice to the market, Oi said BTG Pactual would review alternatives for a viable proposal to acquire the stake, which is worth US$8bn based on TIM Brasil’s current US$12.1bn market capitalisation.
Earlier this month, Portugal Telecom (PT) approved the revised terms of its previously-announced merger wih Oi.
Commenting on the merger at the time, Carlos Winzer, Senior VP at rating agency Moodys said: “The Brazilian market is an opportunity, but also a challenge.”
He also stressed that Oi would need to upgrade its existing infrastructure and invest more in the network following the merger, as well as reduce operating expenses and improve margins, if it wanted to stay competitive.
Telecom Italia and Oi declined to comment on the matter.
