China Telecom weighing whether to acquire Brazil’s Oi for $6B

China Telecom weighing whether to acquire Brazil’s Oi for $6B

China Telecom is reportedly considering an acquisition of a majority holding in Brazil’s Oi for BRL20 billion ($6 billion).

Reportedly, Oi will need to resolve the debt problems that have plagued it before China Telecom will agree to a deal. The beleaguered Brazilian operator is due to meet its creditors on 10th November in an attempt to reach an agreement.

Last week, Oi’s future was discussed in a meeting held in the country’s capital of Brasilia between Brazilian government officials and agents from China Telecom and US private equity firm TPG Capital. China Telecom’s bid for a majority stake reportedly involves building out a fibre network to over 2000 principalities, which would massively boost Brazil’s deployment of high-speed broadband.

Oi’s most recent proposal to restructure its debt was approved by its board, and has been submitted to its creditors ahead of its meeting with them, during which a vote on the operator’s future will be held. A committee of bondholders shot down its previous debt proposal last month, with the operator’s managers in turn rejecting a counter proposal from creditors that held BRL23 billion of liabilities.

The operator first filed for bankruptcy protection in June 2016 and has since been holding negotiations to restructure its debt. If its latest proposals are again rejected, Oi could face liquidation. It is the fourth biggest wireless provider in Brazil with 40 million connections, and also offers broadband, fixed line and TV services.