Telecom Italia (TI) reportedly aims to raise at least €13bn (US$16.8bn) from the sale of its 67% stake in mobile operator TIM Brasil.
This values Brazil’s second-largest mobile operator at about €20bn (US$25.8bn), 11 times its 2013 EBITDA,…
Telecom Italia (TI) reportedly aims to raise at least €13bn (US$16.8bn) from the sale of its 67% stake in mobile operator TIM Brasil.
This values Brazil’s second-largest mobile operator at about €20bn (US$25.8bn), 11 times its 2013 EBITDA, Bloomberg cited two people familiar with the matter as saying.
It had already been suggested that TIM, which Brazilian telco Oi and Mexico’s America Movil are considering making a joint bid for, could command such a price tag.
However, TIM Brasil CEO Rodrigo Abreau has since told reporters that the Italian incumbent has not yet communicated the price it is seeking for its holding in the unit, Reuters stated in a separate report. Saying TIM Brasil will assess any potential takeover bids, Abreau noted that Oi’s adviser BTG Pactual has not yet been in contact to detail a potential offer.
Oi revealed in August that it was considering a bid for TIM, while America Movil CFO Carlos Garcia Morena said yesterday that the company was considering a joint offer.
According to reports, Oi has discussed a potential joint bid with both America Movil, owner of Brazil’s number three mobile operator Claro, and Spain’s Telefonica, which is currently in exclusive talks with Vivendi about buying its Brazilian broadband unit GVT.
Brazilian newspaper O Estado de Sao Paulo recently reported that the Spanish telco’s local unit Vivo, the nation’s largest wireless carrier, would join Oi and America Movil in a bid for TIM by the end of the month.
Vivo yesterday issued a statement in response, saying it does not know where the information in the report came from and has no new material information to convey to the market.
It remains unclear whether TI, which lost out in its recent bid for GVT to Telefonica, will decide to sell its majority stake in TIM. CEO Marco Patuano has repeatedly stressed that the Brazilian business is a core asset, but said the company is open to options.
While some analysts have said TI will have to sell TIM as it would struggle to compete long term if Telefonica succeeds in buying GVT, others have doubted that the Italian incumbent will want to give up an asset in the strong Brazilian market.
Similarly, opinions are divided on whether Brazilian authorities would allow TIM to be divided between other major mobile operators.
Wally Swain, senior vice president at research firm Yankee Group, recently said “[a]ny attempt to take TIM out of the market is bound to meet resistance from competition authorities, the telecom regulator and the cabinet”.
He added that the Brazilian government aims to attract a fifth mobile player and would not permit a reduction from four to three.
