Brazilian telco Tele Norte Leste Participacoes – better known as Oi – has acquired smaller rival Brasil Telecom in a deal it says will allow it to better compete with operators such as Spain’s Telefonica and Telecom Italia, which currently dominate Brazil’s mobile market. According to Reuters, the total value of the deal could reach 12.3 billion reais (US$7.4 billion) and the combined company would control around 70 percent of Brazil’s fixed-line market, 18.5 percent of the mobile market and some 40 percent of broadband. Based on the two companies’ 2007 revenues, the merged entity will create a company worth 28.65 billion reais (US$17.15 billion) in revenues a year. However, the deal is expected to be delayed for as long as six months pending changes to local legislation. Such a merger is illegal under current regulations, which forbids one group from holding two separate telecoms concessions, but the Brazilian government is understood to be keen to scrap the law in order to encourage consolidation in the market. Unlike the other major mobile operators in the market, neither Oi nor Brasil Telecom is majority-owned by a foreign telecoms firm. 

At a press conference late last week, Oi CEO Luiz Eduardo Falco said the new company harboured “ambitions that go beyond Brazil” and hinted that he hoped to take on local rivals such as America Movil, Telefonica and Telecom Italia across the Americas, Europe and Africa. According to Wireless Intelligence data, Vivo Brazil – jointly owned by Telefonica and Portugal Telecom (PT) – was Brazil’s largest mobile operator at the end of 2007 with around 33.5 million subscribers. Telecom Italia’s TIM Brasil was second-placed with 31.3 million and America Movil’s Claro was third with 30.3 million. The combined mobile businesses of Oi and Brasil Telecom would create a company with around 20.3 million subscribers (based on end-2007 data).