Telecoms holding Altice has made a binding offer to buy Portugal Telecom (PT) from Brazilian telco Oi, valuing it at €7.03bn (US$8.8bn).
Announcing the fully-financed offer, Luxembourg-based Altice said the valuation, on a cash and debt free basis,…
Telecoms holding Altice has made a binding offer to buy Portugal Telecom (PT) from Brazilian telco Oi, valuing it at €7.03bn (US$8.8bn).
Announcing the fully-financed offer, Luxembourg-based Altice said the valuation, on a cash and debt free basis, includes a €400m earn-out related to the Portuguese incumbent’s future revenues and a €400m earn-out to do with future operating free cash flow.
Specifically, Altice has offered to buy PT’s business outside Africa, excluding its Rio Forte debt securities, Oi treasury shares and PT financing vehicles.
If the offer is accepted, Luxembourg-based Altice, owned by billionaire Patrick Drahi, said it would finance the deal with new debt and existing cash.
Other suitors for PT reportedly include private equity firms Bain Capital, CVC Capital and Apax Partners. Telecoms giants Telefonica, Vodafone and America Movil have also been named as potential bidders.
Altice, understood to have hired Goldman Sachs and Morgan Stanley to advise it on the potential deal, already has a small footprint in Portugal via cableco Cabovisao and telecoms unit Oni. The purchase of PT would enable it to compete with major players such as Vodafone and Nos.
Such a deal would unwind the merger between PT and Oi, Brazil’s largest fixed-line operator. The two companies announced their combination about a year ago but, in July, agreed PT would acquire a smaller stake in the combined business after it emerged that it was holding debt defaulted by Espirito Santo International’s Rioforte Investments.
Selling PT would enable highly-leveraged Oi to reduce its R$46.2bn (US$19bn) debt pile and free up cash for a consolidation deal in Brazil. Oi and the parent companies of rival operators, America Movil and Telefonica, have reportedly agreed to make a joint R$31.5bn (US$13.1bn) bid to acquire Telecom Italia’s TIM Brasil.
Oi has confirmed that its adviser BTG Pactual has held talks with third parties, including America Movil, to discuss a potential offer for TIM.
Mitsubishi UFJ analyst Rick Mattila said his team believes Oi is willing to sell its Portuguese assets to help fund growth in its home market.
“Given existing market shares, it is likely that other operators in Brazil – Claro (America Movil) and Vivo (Telefonica) – will also play a role in any consolidation deal.”
Meanwhile, South African telcos MTN and Vodacom are reportedly looking at buying a stake in one of Oi’s African units.
Altice has sought acquisitions to boost its presence in Europe. In April, the company agreed to buy French mobile operator SFR in a €17bn deal, planning to merge it with its local cableco Numericable. The deal won regulatory approval last week.
