The consortium formed by the subsidiaries in Brazil of the Spanish Telefónica, which operates under the Vivo brand, the Mexican América Móvil (Claro) and Telecom Italia (TIM) are about to be awarded the mobile telephony assets of Oi, the fourth operator of telecommunications of the country, in an auction to be held tonight (Spanish time), but for which no other bidder is expected.
In fact, Telefónica and its partners start in the process as "first bidder", which guarantees them to match or improve a superior offer that may appear at the last minute.
The consortium presented an improved offer on July 28 for Oi's mobile assets for 16,500 million Brazilian reais (about 2,700 million euros at the current exchange rate), which exceeds the minimum price to participate in the auction set at 15,000 million reais (about 2,435 million euros).
Of this value, 756 million reais correspond to the temporary services that will be provided by Oi to the bidders for 12 months.
Highline Brasil, a company that offers telecommunications infrastructure controlled by the US fund Digital Colony, was the first to announce its interest in Oi's cell phone operations, but finally withdrew from the bid, leaving the way free for Telefónica and its partners .
If the offer of the consortium of which the Spanish is part goes ahead, the next step involves approval by both the country's telecommunications regulator Anatel and the Brazilian competition body (CADE), although they are not expected to put any obstacles.
5G auction
In favor of the consortium of which the Spanish firm is a part, the three member operators have already guaranteed their participation in the bids for 5G that Brazil intends to carry out in the first half of 2021. The auction will grant rights to four different radio frequency bands (700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz), which, considering that it is a country with continental dimensions and a market of 212 million inhabitants, makes the contest one of the largest in the world .
After the operation, Vivo will strengthen its leadership in the mobile market in Brazil, further improving the customer experience, thanks to more spectrum and network assets, which will be key to maintaining a high quality of service in all technologies, and with one less competitor.
Telefónica Brasil, which operates in the South American country through the Vivo brand, is the leader in the Brazilian mobile telephony market with a share of almost 33%, while TIM Brasil is the third operator with a 23.7% share.
Claro, the América Móvil brand owned by Carlos Slim, accumulates 24.4% of the business in the Latin American country, but it is also the largest operator in the region.
Oi is the fourth operator in the Brazilian market with a 16.2% share and 37 million mobile phone customers.
However, the company has been going through a severe crisis for the last four years that slows its future alone.
Oi filed for bankruptcy in Brazil in 2016 to continue operating and since then sought to reorganize with its creditors the payment of an astronomical debt, which at the end of the first quarter of this year, amounted to 24,441 million reais (3,900 million euros), although it reached 66,000 million reais.
At their last meeting, held last September, Oi's creditors approved a plan to sell assets for more than 38,000 million reais (about 6,220 million euros), not only of the assets of the mobile phone network but also of the fiber optic network, for which it has set a minimum price of 20,000 million reais (about 3,270 million euros).
The company sold on November 26 for 1,392 million reais (230 million euros) its 637 telephone towers and five data centers.