After the publication on 15 June of the Judicial Reorganisation Plan that made clear Oi’s plans to sell its mobile assets via what it describes as a competitive process, the cash-strapped Brazilian fixed and mobile operator may be much closer to finding a buyer.
Brazilian regional operator Algar Telecom and Singaporean sovereign wealth fund GIC, which has a stake in Algar, are rumoured to be working together on a possible bid for Oi, according to Brazilian press reports.
Who will actually get Oi’s mobile business is still unclear. Telefonica Brasil and TIM Brasil have been engaged in formal discussions over sharing out the business since March this year. In fact as far back as October last year rumours were flying that Telefonica, America Movil and Telecom Italia had begun talks to jointly purchase Oi’s mobile division and then divide the assets between them.
What may complicate matters – if confirmed – are reports that Algar and GIC are also interested in Oi’s fixed line business. This is not officially up for sale, though it may be attractive to Algar, which is said to own some 31,000 kilometres of optic fibre.
In any case, the auction process Oi has chosen means bidders and commentators may have to wait a little longer for clarity. Oi wants interested parties to submit sealed bids for 100 per cent of its mobile unit. The minimum acceptable bid is about $2.9 billion. While this means the highest bidder should win, the second highest bid over the minimum may yet prevail if, as the terms indicate, it ‘provides greater legal assurances and certainty for the closing of the sale’.
Founded in 1954, Algar Telecom is a Brazilian telecommunications company present in a number of major states with a customer base estimated at over 1.3 million. GIC acquired a 25 per cent stake in the company in March 2018, after which Algar undertook a pair of major acquisitions in energy and telecommunications. However, the Oi deal, if it goes through, would outstrip those by a large margin.