Oi (OIBR +2.6%) plans to sell its 75% stake in Africatel, a holding company for carriers in Angola, Namibia, and other African markets, following a dispute with Helios Investors (owns the remaining 25%).
Bloomberg reports Oi values Africatel, which it obtained through the Portugal Telecom deal, at $2.1B; that implies a $1.6B valuation for its stake.
The Brazilian carrier has been looking to pare its debt load - net debt stood at $20.3B at the end of Q2 - and has also reportedly been looking to acquire a stake in Telecom Italia's Brazilian unit. TI, in turn, has been rumored to be weighing an acquisition of Oi.
Telecom Italia (TI -1.2%) is evaluating a potential acquisition of Brazilian carrier Oi (OIBR +11.8%) through its Tim Participacoes (TSU -2.1%) unit to challenge Telefonica (TEF +0.9%) in Latin America's largest phone market, Bloomberg reports.
In a deal, Tim, Brazil's second largest mobile phone company, would gain Oi’s fixed-line network to sell broadband services after losing out to Spain's Telefonica in a bid to merge with another local landline provider, GVT.
America Movil (AMX -1%) says it plans to enter talks to make a joint bid with Oi (OIBR -3.6%) for Telecom Italia's (TI +1%) TIM Participacoes (TSU +1.2%) Brazilian unit. Telefonica (TEF -0.7%) has also been on the radar to be included in a potential bid.
Oi announced last month that it wanted to make an offer to buy TIM, although any deal would need to split the business to please regulators, as well as meet the high price tag Telecom Italia will demand.
Outlining a joint bid last week, Brazilian newspaper Estado said the three groups would launch a bid before the end of September that would give 40% of the business to America Movil, 35% to Oi and 25% to Telefonica.
Oi (OIBR +9.6%) says it has hired i-bank BTG Pactual to help it explore options for buying Telecom Italia's (TI +4.3%) TIM Participacoes (TSU +6.2%) Brazilian mobile/wireline unit. Shares of all 3 companies are rallying, as are those of Portugal Telecom (PT +6%) and Telefonica's Brazilian unit (VIV +2.4%).
Given Oi's debt load (almost $20B) and potential antitrust concerns, many think a bid for TIM (would lower the number of Brazilian mobile carriers to 3) can only work if Oi partners with other carriers to acquire and break up TIM. America Movil (AMX +0.7%), which owns rival carrier Claro, is viewed as a potential partner.
Oi's disclosure comes as a bidding war between TI and Telefonica (TEF +0.8%) for Vivendi-owned (OTCPK:VIVHY) Brazilian wireline carrier GVT heats up. Reuters reports TI will make a €7B ($9.2B) bid for GVT that would give Vivendi a 15%-20% stake in TI; the WSJ reports Telefonica's board is meeting today to consider upping its €6.7B ($8.8B) GVT bid.
In a 6-K, Portugal Telecom (PT +7.5%) says it owned €750M ($990M) in short-term debt issued by Espirito Santo International, as of the end of 2013. The figure includes €500M that was settled on Feb. 10, €200M settled on Jan. 29, and €50M settled on Feb. 20.
PT and Oi (OIBR +9.3%) are up sharply. Shares of both carriers have been hit hard by PT's purchase of €897M in debt issued by Grupo Espirito Santo subsidiary Rioforte. In July, PT and Oi restructured their merger agreement to account for the purchase.
In its first earnings report since merging assets with Portugal Telecom (PT -6.3%) in April, Oi (OIBR -3.2%) reported a Q2 loss of R$221M ($97M), and a 21.3% Y/Y drop in pro forma EBITDA to R$2.55B.
Brazilian revenue fell 2% to R$6.94B. Forex swings allowed Portuguese revenue to rise 9.5% to R$1.9B; it was down 3.4% on a euro basis.
Oi ended Q2 with 74.9M Brazilian revenue-generating units (+0.4% Q/Q and +0.2% Y/Y), 12.9M Portuguese RGUs (-0.8% Q/Q and +1% Y/Y), and 14.3M RGUs elsewhere (+1.9% Q/Q and +12.8% Y/Y). Net debt stood at R$46.2B ($20.3B).
Separately, Oi CEO Zeinal Bava is resigning as Portugal Telecom's chairman to focus on running the post-merger company. Former Nokia Siemens exec Armando Alneida will be PT's new chairman.
PT and Oi both fell yesterday after Telefonica bid $9B for fellow Brazilian carrier GVT.
Telefonica (TEF -3.1%) and Brazilian subsidiary Vivo (VIV -7.5%) are off sharply following news Telefonica has bid $9B to acquire Brazilian wireline carrier GVT from Vivendi (OTCPK:VIVHY +1.9%), with plans to merge it with Vivo's mobile and wireline ops.
America Movil (AMX -2.5%), which had 68.8M Brazilian mobile subs and 34.5M wireline revenue-generating units at the end of Q2, is also off. As are Telecom Italia (TI -6%) and Brazilian unit TIM Participacoes (TSU -9.7%), and Oi (OIBR -6.7%) and merger partner Portugal Telecom (PT -5.1%).
Vivendi says it will study Telefonica's bid, but insists for now that "none of its subsidiaries are for sale." The conglomerate agreed to sell French carrier SFR in April.
A Vivo/GVT pairing could be a tougher rival for America Movil and Oi/PT, and would likely lead to a sale of Telefonica's stake in TI (as sought by Brazilian regulators). As it is, Telefonica has announced plans to cut its TI stake (currently at 14.8%) through a convertible debt offering.
There's speculation Vivendi could take Telefonica's remaining TI stake as part of its payment for GVT, but Nomura has its doubts. "It's hard to see why, from a Vivendi shareholder's perspective, they would want to have a minority position in Telecom Italia."
Espirito Santo International says it can't meet its debt obligations, and requests to be placed under "controlled management." The announcement comes 4 days after the Bank of Portugal ordered Banco Espirito Santo to replace its management.
Portugal Telecom (PT -2.9%) and Oi (OIBR -3.3%) have dipped following the report. On Wednesday, PT announced it's amending its merger agreement with Oi to account for the controversial purchase of $1.15B in debt (now in default) issued by a Grupo Espirito Santo subsidiary.
Since then, Moody's has placed both PT and Oi's debt ratings under review for downgrade. The ratings agency argues the new merger agreement, which gives PT the option to buy back Oi shares that will be held in treasury, "clearly benefits stock holders at the expense of bondholders."
In order to salvage its planned merger with Oi (OIBR +13.1%), Portugal Telecom (PT +1.6%) has agreed to lower its stake in the merged company to 25.6% from a prior 39.6%, courtesy of a share transfer.
The restructuring stems from PT's purchase of $1.15B in debt issued by Rioforte, a subsidiary of PT shareholder Grupo Espirito Santo. The debt was defaulted on yesterday, heightening fears Rioforte will file for bankruptcy. Regulators are already probing the debt purchase.
The revised deal calls for PT to transfer 474M Oi common shares and 949M preferred shares to Oi, which will hold them in treasury. PT will have a 6-year option to buy them back, but the option's size will decline annually. Bloomberg notes Oi had 2.8B common shares and 5.7B preferred shares as of May.
Portugal Telecom (PT -5.7%) is now down 32% from its June 26 close, and Brazilian merger partner Oi (OIBR -6.7%) 26%, as Portuguese equities sell off hard again thanks to bankruptcy fears for Banco Espirito Santo.
Trading in the shares of Portugal's biggest bank has been halted. Meanwhile, fears that PT's controversial purchase of debt issued by a Grupo Espirito Santo subsidiary will unravel the Oi merger continue to run high.
Portuguese equities sold off, and the country's bond yields spiked, amid fresh concerns about the financial health of Banco Espirito Santo, whose parent company (Grupo Espirito Santo) happens to be a major Portugal Telecom (PT) shareholder.
Meanwhile, Brazilian state development bank BNDES has sharply criticized PT's purchase of $1.23B in debt issued by a Grupo Espirito Santo subsidiary, asserting the deal doesn't meet "minimum standards of good corporate governance."
The bond purchase has already led to board resignations, as well as scrutiny from Brazilian securities and telecom regulators. The backlash has sparked fears PT's planned merger with Oi (OIBR) could be derailed.
Continuing the tower industry's massive acquisition spree, SBA (SBAC +1.1%) is buying another 1,641 sites from Brazilian carrier Oi (OIBR +1.4%) for R$1.17B ($527M).
The deal will be funded with both existing cash and a revolver facility, and is expected to close by year's end. The sites are expected to contribute R$125.7M in cash leasing revenue and R$74.2M in tower cash flow in 2015.
In March, SBA closed a deal to buy 2,007 sites from Oi for $645M, and last November, it bought use rights for 2,113 sites from the carrier for $321M.
Last week, rival American Tower announced it's buying 2,530 Brazilian towers, along with use rights for another 2,110, for $978M. In 2013, In 2013, AMT bought NII Holding's Brazilian sites for $811M.
SBA had $6.5B in net debt at the end of Q1. It recently announced it's selling another $750M in debt, partly to refinance.
Oi has been hungry to pare its massive debt load ($13.7B in net debt at the end of Q1) ahead of its merger with Portugal Telecom (PT +2.7%). The company launched a major stock offering in April.
Oi's (OIBR -9.9%) revenue fell 4.6% Q/Q and 2.3% Y/Y to R6.88B ($3.12B). Personal Mobility revenue -6.5% Y/Y to R$2.17B amid tough price competition; residential revenue -0.1% to R$2.55B, corporate/SME revenue +0.6% to R$2.09B.
Earnings fell 13% to R$228M. EBITDA margin was 43%, up from the year-ago period's 30.5% but down from Q4's 48.5%.
The Brazilian carrier's revenue-generating units (RGUs) rose fractionally Q/Q to 74.6M. Personal Mobility RGUs +0.9% to 48.2M (41.4M prepaid), residential -1% to 17.7M (fixed-line losses), corporate/SME -1.3% to 8.1M, public phones +0.3% to 657K.
Oi SA is a telecommunications service provider in Brazil. It offers services that include fixed-line & mobile telecommunication services, network usage, data transmission services, pay TV, internet services & other telecommunications services.