In the latest twist to frantic operator re-positioning in Brazil, Telecom Italia, majority shareholder in TIM – the country’s second-largest mobile operator – is said to be weighing up a bid for Oi, a major fixed-line player.
According to Bloomberg sources, Telecom Italia has spoken to advisers about using TIM to make its move on Oi.
The Italian incumbent has been on the back foot in Brazil since Vivendi opted for exclusive talks with Telefonica to offload GVT, the French conglomerate’s broadband unit in the country.
Telecom Italia hoped an acquisition of GVT would help shore up falling voice revenue at TIM. A deal with Oi would give it access to a fixed network, with the opportunity to sell bundled services.
Last month, Oi reportedly hired BTG Pactual to sound out both Vivo (owned by Telefonica) and Claro (America Movil) about mounting a joint bid for TIM. Subsequent media reports claimed the three firms were preparing a BRL30 billion ($13 billion) bid for Telecom Italia’s Brazilian subsidiary.
Vivo is Brazil’s mobile market leader. Claro lies in third place, while Oi’s own mobile unit is fourth.
Telecom Italia CEO Marco Patuano has long maintained that TIM is a strategic asset, which it wouldn’t be willing to sell (although Reuters has also reported his attitude towards a sale might soften if the price was right).
Rodrigo Abreu, TIM’s chief executive, recently said the financial muscle was there to make acquisitions. “We’ve always made clear that our financial flexibility is one of our strengths,” he said on 11 September, quoted by Bloomberg, when asked whether the company was willing to take on debt to finance expansion.
“We’re a company with a very low level of debt. We could make a move when an opportunity arises.”