America Movil, Oi and Telefonica are joining forces to bid for TIM Partecipacoes, the Brazilian unit of Telecom Italia.
The three firms - all of which provide services in Brazil - are lining up a $13.1 billion bid for TIM, which they then plan to split up between them. The sum, which has been agreed in principle but not finalised, includes a 5% payout to TIM’s current controlling and minority shareholders.
TIM will be split three ways between the operators, with America Movil taking the largest amount (40%) of the business. Telefonica and Oi will then take 32% and 28% respectively. A proposal from Telecom Italia to merge TIM with Oi was dismissed.
Oi, which is the smallest mobile operator in Brazil, reportedly enlisted the services of BTG Pactual to approach Claro and Vivo – the Brazilian subsidiaries of America Movil and Telefonica respectively – regarding the possibility of a joint bid.
Shifts in the balance of the Brazilian market have put Telecom Italia on the back foot – it was beaten by Telefonica in a bid for broadband provider GVT. The Italian incumbent’s CEO Marco Patuano has repeatedly stated that the group is unwilling to part with TIM as it is a strategic asset. However, his stance may relax with the right price.