It took close to two years, but the planned acquisition of mobile assets belonging to Brazil's Oi by a trio of rival operators is on course to be concluded next week after regulatory authorities approved the deal.

Telecom Italia's Brazilian subsidiary TIM SA, Telefônica Brasil (Vivo) and Claro Americas, the Brazilian operation owned by América Móvil, have just announced that the date for the closing of the transaction is set for April 20, 2022.

Figure 1: According to Telecom Italia, the closing of the acquisitions will create a "new infrastructural balance in the Brazilian market."
(Source: Unsplash)

The three operators will no doubt hold off from popping the corks until the ink has fully dried on all signatures required to finally seal the deal. After such a protracted process, it seems unlikely that any of the parties concerned will be taking anything for granted.

Long time coming

Oi filed for bankruptcy protection in 2016, citing a debt load of $19 billion. In March 2020, reports were circulating that Telefónica Brasil and TIM SA had expressed interest in buying the Brazilian operator's mobile unit, with the ultimate aim of divvying up the assets between their respective operations.

The two operators, along with Claro, went public with a joint "binding offer" for Oi's mobile assets in July 2020. Oi then announced that it had entered into exclusive talks with another potential buyer, Highline do Brasil II Infraestrutura de Telecomunicações S.A., a portfolio company of US private equity firm Digital Colony.

After some hurried discussions, the Claro/TIM/Vivo combo came back to Oi with a revised joint binding offer for the mobile business of BRL16.5 billion (US$3.2 billion at the time), although the size of the original offer was never disclosed.

Much to their undoubted relief, Oi accepted this offer and granted the trio "stalking horse" status, which gave them the right to outbid other proposals, the so-called "right to top," provided that the offer was 1% higher than rival bids.

Fast forward to 2022 and the auction process for the mobile assets ("mobile assets UPI," one of five isolated production units created by Oi) has taken place and the acquisition approved by Brazil's antitrust authority, CADE, as well as regulator Anatel.

According to a statement from Telecom Italia, the closing of the acquisitions will create a "new infrastructural balance in the Brazilian market, with three major operators ensuring a high level of competition, customer benefits and adequate investment for the development of telecommunications infrastructure and the digitalisation of the country."

It remains to be seen if this lofty ambition is achieved.

More than mobile

Meanwhile, Oi held separate auctions for four other UPIs: the five data centers, mobile towers, TV assets (Oi TvCo) and a 51% stake in fiber unit InfraCo.

Brazil-based private equity firm Piemonte Holding acquired the data center UPI in March 2021 for a total amount of BRL367 million ($70 million at the time). The data centers in Curitiba, Porto Alegre, São Paulo and Brasília (two units) are now part of Elea Digital, Piemonte's data center company. In July 2021, Elea Digital acquired a sixth data center in Rio de Janeiro from Grupo Globo, a Brazilian media group.

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Highline snapped up the mobile towers, meanwhile. The sale of the pay TV satellite production unit, TVCo, does not yet appear to have been completed.

As for InfraCo, it was announced in October 2021 that a 57.9% stake was to be acquired by a consortium comprising funds owned by BTG Pactual and Globenet Cabos Submarinos. In anticipation of the deal's closing, InfraCo was renamed V.tal. Although the deal has been approved by CADE, the parties are still waiting for the green light from Anatel.

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— Anne Morris, contributing editor, special to Light Reading