Telecom Competitors’ Consortium Bids R$16.5 Billion to Acquire Brazilian Oi Mobile

RIO DE JANEIRO, BRAZIL -The Brazilian telecommunications market will experience one of the main chapters in its history as of Monday with the auction of Oi. The preference for the purchase lies in the consortium formed by rivals Vivo, TIM and Claro, which have already placed a proposal for R$16.5 billion.

The other potential candidate is Highline do Brasil, which made a formal proposal whose exact amount has not been disclosed, but which was ultimately topped by the trio. After that, Highline publicly announced that it will not stay in the game.

The potential split of Oi Mobile among its rivals will lead to a new configuration of the Brazilian telecoms market, roughly as follows: Vivo will increase from 33% to 37%; TIM from 23% to 32%; and Claro from 26% to 29%. Oi, with 16%, would disappear from the mobile segment. The remaining 2% would continue in the hands of regional operators. These estimates are provided by Omdia, an international consulting firm specializing in telecommunications, technology and media.

TIM is expected to keep the largest share of Oi Mobile, as part of the group’s strategy to reduce resistance from a regulatory and competitive standpoint. “In the division, the trend is for the operator with less market share in each region to keep Oi’s assets in that location,” says Omdia’s Ari Lopes.

The allocation figures designed by the consortium have not yet been disclosed, but the market expects this definition to consider two factors. One of them is the operators’ client portfolio in each region – segmented by DDDs (Direct Dial). The predominance of one telecom over the others could impact competition and be a reason for discussion at the Administrative Council for Economic Defense (CADE), Brazil’s antitrust regulator.

Another point that will influence the share is the amount of frequency of each telecom. Frequency is a kind of “highway in the air”, through which internet signals travel. The more frequency each operator has, the greater its coverage capacity and the higher the quality of service offered.

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