It’s been a long and complicated journey to get here, and the approvals processes are not complete.
TIM announced the offer submitted by its local Brazilian operating company, along with those of Telefônica Brasil (VIVO) and Claro, has been accepted and they will jointly acquire Oi Group’s mobile business – there have been many twists and turns to get to this point during 2020.
It is expected that the transaction will be completed in 2021 and remains subject to the fulfilment of some conditions provided for in the agreements and the authorisations of the relevant authorities.
The total value of the transaction is 16.5 billion reais (about €2.7 billion), which includes the consideration offered to the Oi Group, of about 819 million reais (about €134 million) for taking over the data transmission capacity.
TIM Brasil will pay about 7.3 billion reais (about €1.2 billion) to be paid at closing and 476 million reais related to the portion of TIM Brasil in those contracts for data capacity.
TIM said that given the low debt and the favourable market conditions, its Brazilian business unit believes it can finance the acquisition through cash and the local debt market, but will evaluate options if the market conditions change.
The purchase plan provides for TIM Brasil, Telefônica Brasil and Claro to divide up Oi’s mobile assets including its customers, radio frequencies and mobile access infrastructure.
TIM Brasil will be allocated:
• About 14.5 million customers (corresponding to 40% of UPI Ativos Móveis’ total customer base) – according to Anatel’s data of April 2020. The allocation took into consideration criteria that favour competition among the operators present in the Brazilian market.
• About 49 MHz as a national average weighted by population (54% of UPI Ativos Móveis radio frequencies). The division of frequencies strictly respects the spectrum limits per group established by Anatel;
• About 7.2 thousand mobile access sites (corresponding to 49% of total UPI Ativos Móveis sites).
TIM says that once completed, the acquisition will add value not only to its Brazilian subsidiary but to the whole Group and its shareholders as it will accelerate its growth and increase operating efficiency through relevant synergies.
Furthermore, it expects positive effects for customers, as the transaction is likely to improve the users’ experience and the quality of services offered.
Finally, the transaction should “benefit the entire telecommunications sector in South America, which will be strengthened in its investment capacity, technological innovation, as well as its competitiveness”.