Tough Call

The race to acquire Oi’s mobile assets.

Oi, the Brazilian telecoms operator, is selling assets in an attempt to exit bankruptcy protection. The company is hoping to raise around $3 billion from the sale of its mobile business with negotiations already underway, bidding expect in the fourth quarter and a target to conclude the transaction by the end of 2021.

An initial bid was received from a consortium of Telefonica Brasil, Telecom Italia’s TIM and America Movil’s Claro, but this was trumped by Highline do Brasil, the infrastructure investment firm backed by Colony Capital through Digital Colony.

However, after exclusive talks with Highline ended on 3rd August without a deal the consortium submitted a revised joint offer of $3.2 billion on 10th August and are now themselves in exclusive talks.

“It is unlikely that the federal government will take sides.”

CEO of a leading telecoms consultancy in Brazil.

Our sources still describe the negotiations as “extremely delicate” and “intricate”, given the number of different interests at stake. Furthermore, the number international equity and debt investors on all sides of the table certainly make this a closely-followed transaction.

The regulator also has an important role to play. Oi is not committed to accepting the highest offer but must also consider the competitive and regulatory environment around any deal. It has been reported that Brazil’s authorities would prefer an outcome that maintains four infrastructure competitors. It should also be noted that any bid from the consortium is likely to see a review that could take up to 240 days + a 90 day extension – this could easily push completion back to 2022. A less contentious bid, such as that from Highline, could be approved in a matter of weeks.

“The sale of Oi’s mobile assets has the potential to transform the sector.”

Executive at SindiTelebrasil.

The CEO of a leading telecoms consultancy in Brazil told us: “CADE [the Brazilian competition authority] still needs to analyse the offers for Oi mobile services. [If] joint offer … prospers it is very likely that they will have to sell part of Oi’s assets to third party. However, CADE will not go as far as ‘choosing’ the ultimate buyer. It is also unlikely to see the federal government implicitly taking sides in this matter.”

It is still too early to determine if there is a favoured bid but reassuringly for Oi’s creditors it seems that there are deals to be done!

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