AMX, Telefonica Brasil, Oi, TIM expected to take part in auction

The Brazilian government plans to sell TV airwaves in the low-frequency 700-MHz. band (good for rural areas and in-building coverage) to mobile carriers. America Movil (AMX +2.2%), Telefonica Brasil (VIV -0.2%), Oi (OIBR +5.9%), and TIM Participacoes (TSU -2%) are expected to take part.

Analyst Luis Azevedo thinks total auction expenses could top 7B reais ($3B), after factoring costs related to moving broadcasters to other spectrum and reducing interference. Unlike past auctions, the spectrum sale doesn't come with coverage requirements.

Bidding is expected to start in August. The auction announcement comes with TIM's future still up in the air. Telefonica's efforts to up its stake in TIM parent Telecom Italia have fueled expectations TI will sell TIM. Regulators have suggested they'd prefer TIM be sold to an outside party, rather than acquired piecemeal by its rivals.

Comments (4)
  • Fred d
    , contributor
    Comment (1) | Send Message
    Oibr is a double from here!
    24 Mar 2014, 03:17 PM Reply Like
  • Leo Soong
    , contributor
    Comments (85) | Send Message
    Dear Fred d,
    That's a brave prediction when they are paying out 77% of the value of the company in cash to control shareholders who own less than 18%. I think there will be some "pop" once they ramrod the merger through, just as a relief rally that the uncertainty is over; but it would be hard to give away so much of the company's assets and still have the remainder double. I'm not trying to be immodest, but if you haven't read my article on Seeking Alpha, I would recommend it.
    24 Mar 2014, 05:26 PM Reply Like
  • butteredbread
    , contributor
    Comments (29) | Send Message
    Oi takes part in an auction... with what money??
    24 Mar 2014, 04:19 PM Reply Like
  • Leo Soong
    , contributor
    Comments (85) | Send Message
    Dear buttered bread,
    Exactly, Oi S.A. has no money. If they would simply announce that they are canceling the Convertible Debenture transaction with their Telemar Participacoes control shareholders; go through with the merger with Portugal Telecom; and use the BR$7 billion which they were raising to give to Telemar to participate in spectrum auctions and build up their network, the shares would probably come close to immediately doubling (with more to come as they develop the network and perhaps pick up pieces of TIM).
    Thanks, Leo
    24 Mar 2014, 05:33 PM Reply Like
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