October 21, 2020

Telefónica presents an offer for the mobile business of the Brazilian group Oi


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Telefónica has presented a binding offer for the acquisition of the Brazilian Oi’s mobile business, according to what was reported today to the CNMV. As reported by ABC, the teleco chaired by José María Álvarez Pallete was finalizing an offer for the fourth Brazilian operator, which has been made official first thing in the morning. For this, the Spanish company, leader in the Brazilian mobile market with the Vivo brand and a 33% share, has teamed up to present its offer with its two main rivals in the country: the Italian TIM (with a 23.2% share) and Claro, a subsidiary of the Mexican giant América Móvil (24.4% share), controlled by Carlos Slim. The latter has been pointed out at the last moment.

The minimum price to bid for Oi’s mobile assets, which is currently in bankruptcy, was set last month at about 2,538 million euros. In the communication sent to the CNMV, Telefónica assures that, should the operation materialize, it will mean “greater growth, generation of operating efficiencies and improvements in the quality of services”. In his opinion, its success will contribute to the development of the telecommunications sector in the Latin American country.

The final amount of the offer will be distributed among the three buyers. «In case of acceptance of the proposal presented and execution of the operation, ctogives one of the interested parties will receive a part of said business ”, explains Telefónica.

The Brazilian company announced that the sale would be made for highest bidder auction, with the exception that if the second best offer is only 5% lower, the legal guarantees or the strength of the proposal presented will also be valued. It also segregated other assets likely to whet the purchase appetite of other market players such as towers and UPI data centers. Specifically, Oi wants to raise up to a total of 23,000 million reais (more than 4,290 million dollars).

With this movement, Oi intends to boost fiber optics and related services, which it considers key to its immediate growth as reflected in its recently approved Strategic Plan.

Brazil, strategic market

For Telefónica, the Latin American giant is one of its four strategic markets along with Spain, Germany and the United Kingdom where it has decided to focus its activity within the new strategy approved in November. In the first quarter of this year alone, it already represented 20% of revenues and, in number of clients, it is the first country (93.2 million total accesses).

Telefónica has been starring in important movements since the beginning of the year: in full confinement it surprised the markets with the agreement to merge O2 with Virgin Media (Liberty Global) in the United Kingdom, with which a joint venture valued at 35.9 billion will be created, and the sale to Telxius (controlled by Telefónica and that I count as minority shareholders with the KKR and Pontegadea fund) of 10,100 telecommunications towers from Telefónica Deutschland. This Friday Bloomberg and other media pointed out that the Spanish multinational is considering trying, for the second time, its IPO.

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