The Telecom Italia (TI) board has given management the go-ahead to examine a possible tie-up between its Brazilian unit and local rival Oi, as it agrees to sell towers in the country.
The Italian incumbent, which has a 66.5% stake in TIM Brasil, said in…
The Telecom Italia (TI) board has given management the go-ahead to examine a possible tie-up between its Brazilian unit and local rival Oi, as it agrees to sell towers in the country.
The Italian incumbent, which has a 66.5% stake in TIM Brasil, said in a statement that management has been mandated to “examine in depth the options for a possible integration of TIM and Oi”.
“The next steps, if there are any, will be submitted to the board for approval following the opinion of the committee of independent directors”.
The Brazilian telecoms sector is already consolidating, with Telefonica having agreed to acquire broadband operator GVT from Vivendi for €7.2bn (US$9.3bn).
The Spanish telco has also reportedly agreed with Oi and America Movil to make a joint bid to acquire and break up TIM. One Brazilian newspaper reported in late October that the trio were looking to pay R$31.5bn (US$13.1bn) for the business, which is Brazil’s second-largest mobile operator after Telefonica Brasil (Vivo), although an offer had not been finalised.
The price would reportedly include a 5% premium pay-out to TIM shareholders.
Oi’s adviser, BTG Pactual, is working with the consortium which is reportedly expected to present a bid to TI shareholders.
Meanwhile, rumours that TI would consider a bid for Oi, the fourth largest mobile player in Brazil, have persisted for some time.
TI CEO Marco Patuano has repeatedly described TIM as a core asset, but said the company remains open to all options in the country. He was quoted during a conference call earlier this month as saying the company had to explore the possibility of buying or merging with Oi, but it would only consider doing so at a very attractive price.
Separately, TI has announced that its board has approved the sale of 6,481 telecoms towers in Brazil to American Tower for about R$3bn (US$1.2bn).
In its own statement on the deal, the Boston-based towerco said it had reached an agreement to acquire two tower portfolios: the first comprising about 5,240 masts and the other about 1,240. The second lot is subject to certain pre-emptive acquisition rights held by third parties.
American Tower said it plans to finance the purchase “in a manner consistent with its previously-announced leverage targets”.
The company expects the towers to generate about R$435m (US$171m) in annual run-rate revenues and about R$191m (US$75m) in annual gross margin.
TIM will be the anchor tenant on both tower portfolios under leases with initial 20-year terms.
The tower deals are expected to close in the first half of 2015, subject to customary conditions, regulatory approval and, for the second portfolio, the expiration of the third parties’ pre-emptive rights.
TI CFO Piergiorgio Peluso said during a conference call earlier this month that TIM will use the proceeds of the tower sale for future spectrum payments.
American Tower reportedly beat Goldman Sachs-backed Cell Site Solutions to the assets.
Last week, the acquisitive US towerco completed its R$2.55bn (US$880m) purchase of BR Towers, which operates more than 4,600 sites in Brazil, as part of plans to expand in Latin America.
American Tower is also reportedly among the bidders for Italy-based Wind Telecomunicazioni’s towers.
TI eyes control of Metroweb
In Italy, TI said it has sent a proposal to Italian infrastructure fund F2i formalising its interest in acquiring a controlling stake in fibre optic operator Metroweb as soon as possible.
“Telecom Italia identifies Metroweb as the partner with which it could quickly create the development plan for the new generation network infrastructure (NGN) in optic fibre at national level.”
The Milan-based telco said teaming up with Metroweb would speed up the development of the ultra-broadband network. The two companies would create FTTH and FTTB infrastructure in major Italian cities to satisfy and promote demand for high-speed broadband services and help satisfy targets set out in the Digital Agenda.
Vodafone, which operates Italy’s second-largest mobile player, is also looking at buying a stake in Metroweb, according to a news agency report earlier this month citing two people familiar with the matter.
F2i holds an indirect 46.8% interest in the dark fibre operator, while most of the remaining shares are split between CDP, with an indirect 32.2% stake through Fondo Strategico Italiano (FSI), and Fastweb which holds 10.6%.
A deal with Metroweb would make strategic sense for TI, which is striving to reduce its nearly €27bn of debt to upgrade its broadband network.
