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- We summarize the latest news about the consolidation of the telecom market in Brazil and the large asset sale.
- We provide an overview about the underlying facts.
- We conclude that Oi is still well positioned for the expected developments.
- We present the latest news around Oi's sale of Portugal Telecom assets.
- We discuss the outcome of the events and possible scenarios.
- We find that while things still remain vague in detail, the overall positive influence remains unchanged.
- We discuss the sale of Oi's Portugal Telecom assets.
- We suggest that the bearish pressure over the last week should not be overestimated.
- We conclude that recent developments are in favor of Oi and its shareholders.
Oi: Insiders, Institutional Investors, Funds And Short Interest
- We explain Oi's shareholder structure.
- We provide an overview of management's interests in the company.
- We present the most important institutional shareholders and funds that hold Oi.
- We discuss the development of short-interest in Oi.
- Last week, Oi SA reported weak third quarter results. The poor performance of the company was mainly due to the competition in Brazil that is getting harder and harder.
- The company is fully focused on creating value for the current shareholders as it is committed to reduce the cash burn through 2015.
- If PT is sold for €7bn, in line with the binding offer presented by Altice, Oi will reduce its net debt by R$21.7bn.
OI: A Theoretical Approach Toward A Possible Merger With TIM
- We explain the current news around a possible merger between OI and TIM.
- We analyze multiple scenarios for possible outcome of this ongoing bargaining process.
- We conclude that an OI/PT merger is the most likely scenario under the actual circumstances.
Oi SA - Is The Recent News The Catalyst We Were Waiting For?
- Oi SA confirmed that it had received a proposal from Luxembourg-based Altice SA.
- The offer to buy PT Portugal from Oi SA, values the Portuguese telecom business at $8.8 billion.
- The infusion of cash will improve Oi's financial flexibility, allowing the company to launch a joint bid for TIM Brazil.
- We explain the latest news about official investigations concerning OI's role in the PT/Espirito Santo Deal.
- We describe possible scenarios for OI's shareholders.
- We find that current shareholders should not be worried about the recent news.
Oi SA And Portugal Telecom - M&A News Appears To Be Imminent
- A recent report states that Oi SA and two other companies have agreed to acquire Brazil's mobile operator TIM Participacoes to become the third largest telecommunications company in Brazil.
- A prerequisite for TIM's acquisition is for OIBR to sell Portugal Telecom to one of 6 suitors for about $8.8B. PT's current market cap is $1.4B.
- TIM's parent company Telecom Italia is said to be more interested in merging with OIBR for $1.2/share, or over 100% premium over the current 53c/share price.
- We discuss the recent news about a possible joint bid for TIM with Claro and Vivo.
- We explain what the current news means for the shareholders.
- We conclude that even as the speculation about mergers in the Brazilian telecom sector accelerate, no deal is closed yet and investors should remain calm.
- We provide a brief outlook for possible news next week.
How A Sale Of Portugal Telecom's Assets Will Impact Oi's Balance Sheet
- We present the recent news about different players interested in buying Oi's Portugal Telecom assets.
- We analyze the impact such a sale would have on Oi's debt load and balance sheet.
- We conclude that the sale of PT assets is beneficial for the company and should be understood as good news.
- Since last month the stock has lost almost 30% of its value.
- The unlucky current position of Portugal Telecom gives more power to Oi SA over the terms of the merge.
- Oi SA has two options: continue with the merge or sell its stake in PT.
- Comissão do Mercado de Valores Mobiliários (CMVM) together with the UK have temporarily banned naked short selling for Portugal Telecom.
- We present the recent news and events around OI: PT sales, reverse-split and election polls.
- We evaluate the positive and negative effects that these news may have on OI.
- We conclude that the recent situation is very hazy for OI shareholders, but the company's long-term outlook remains unchanged.
- CEO Zenial Bava resigned last week.
- There have been several rumors about an offer to buy Portugal Telecom.
- Oi is trying to reduce its large amount of debt through the sale of non-strategic assets.
- The company is trying to expand its share to different markets.
OI And TIM: What Would A Merged Company Look Like?
- We present OI and TIM with their specific product-portfolio, market-share and other information.
- We analyze differences in their business models and point out the positive effects of a possible merger.
- We explain that a possible OI/TIM merger would be a beneficial decision for both companies.
- We explain why Oi dropped 12% yesterday.
- We analyze the news and rumors that caused yesterday's sell-off.
- We conclude that the market overreacted on a weak day, and that current prices can be attractive for buyers.
Oi And The Elections: Why Is It Not Gaining Like Petrobras And The Rest?
- We explain the first-round results of the presidential election in Brazil.
- We sketch possible opportunities and risks for Oi shareholders based on these insights.
- We explain why Oi did not follow the general rally in Monday's market environment.
- We conclude that long-term investors must not get worried during the next few weeks.
Oi: One Merger Please - About The Opportunity Of Brazilian Demographics
- We explain the future development of the Brazilian population.
- We formulate the effects that these findings have on Oi's strategies.
- We evaluate the chances a possible buy or merger could bring for the company in this environment.
- We conclude that in the light of long-term demographic changes, Oi might reasonably consider to buy/merge with a large competitor.
Mon, Dec. 22, 12:07 PM| 3 Comments
Thu, Dec. 18, 6:14 PM
- Bloomberg reports Telecom Italia (NYSE:TI) is "leaning toward making an all-stock offer" through 67%-owned TIM Participacoes (NYSE:TSU) to merge with Brazilian rival Oi (NYSE:OIBR), should it bid for Oi.
- However, sources add TI wants a thumbs-up from Brazil's telecom regulator before it makes a move, and is unlikely to decide on its plans before February or March. An all-stock offer would allow debt-laden TI to avoid hurting its credit rating.
- The latest wrinkle to Brazil's telecom drama comes a week after Bloomberg reported Oi, America Movil/Claro, and Telefonica/Vivo plan to jointly offer $15B for TIM. Such a deal could be easier for regulators to swallow, since it would spread TIM's assets between three carriers.
- Oi rose 10.7% in regular trading today, aided by a market rally. Shares made a new 52-week low of $0.33 on Wednesday.
- Prior Oi/TIM coverage
Tue, Dec. 16, 11:14 AM
- Oi (OIBR -9.8%) CEO Bayard Gontijo stated yesterday his company will hold a Jan. 26 bondholder meeting in which it will ask for debt level restrictions to be loosened, in order to gain more M&A flexibility.
- Oi already had R$47.8B ($17.3B) in net debt at the end of September. The carrier is set to reap $9.1B from selling its Portuguese ops to Altice.
- Rivals TIM Participacoes (TSU -3.2%) and Vivo (VIV -2.2%) are also selling off; Brazil's Bovespa index is down 0.6%. Oi has been rumored to be planning a joint bid for TIM with Vivo and America Movil's Claro.
- Previous: TI reportedly in no rush to sell TIM
Fri, Dec. 12, 2:40 PM
- Providing fresh fodder for Brazil's ongoing telecom soap opera, Reuters reports Telecom Italia (TI -2.1%) "has concluded it cannot make a move in the expected consolidation of the Brazilian market ... until the corporate turmoil abates at prospective merger partner Oi (OIBR -6.3%).
- Oi, which just agreed to sell its Portuguese ops for $9.1B, reportedly needs to "cut its debt and costs" before TI agrees to merge TIM Participacoes (TSU -2.8%) with its Brazilian rival. "[Telecom Italia] is in no rush. They are testing the ground and they will not make a rushed decision," says a source.
- Bloomberg reported on Wednesday Oi, America Movil/Claro, and Telefonica/Vivo plan to jointly bid $15B for TIM. Vivo (VIV -2.7%) denies it's currently in acquisition talks.
- All of the related parties are selling off on a rough day for equities in general, and telecom names in particular.
Wed, Dec. 10, 1:53 PM
- Bloomberg reports Oi (OIBR -2.6%), America Movil's (AMX -2.7%) Claro, and Telefonica's (TEF -0.7%) Vivo (VIV +2.8%) plan to jointly offer $15B for Brazilian rival TIM Participacoes (TSU +11.6%).
- TIM has soared on the report, which comes shortly after Oi struck a deal to unload its Portuguese ops for $9.1B. TIM's market cap is now at $12.1B; parent Telecom Italia (TI +1.2%) has risen modestly.
- A Brazilian paper reported in October Oi, Claro, and Vivo were interested in acquiring and breaking up TIM to consolidate a mobile market facing slowing growth and tough price pressure.
Tue, Dec. 9, 10:37 AM
- Portugal Telecom (PT +3.4%) is higher on a rough day for equities after Oi's (OIBR -3.6%) board signed off (following weeks of rumors) on the sale of Oi's Portuguese ops to Altice for $9.1B. Oi is heading in the opposite direction.
- TIM Participacoes (TSU +0.7%), which many expect will now be targeted by Oi (and perhaps also other Brazilian mobile rivals), is up modestly.
Tue, Dec. 9, 6:55 AM
- Oi's (NYSE:OIBR) board has approved the sale of its Portuguese ops to France's Altice for €7.4B ($9.1B).
- Previously: Altice reportedly near deal to buy Oi's Portuguese ops (Nov. 30 2014)
Mon, Dec. 1, 11:41 AM
- Oi (OIBR -4.6%) and Portugal Telecom (PT -5.5%) are both off sharply following reports Altice is close to buying Oi's Portuguese ops (PT Portugal) for $9.2B. With M&A rumors having swirled for weeks, some investors may have been hoping for a higher offer.
- Meanwhile, P-E firms Bain and Apax haven't thrown in the towel. Portuguese conglomerate Semapa disclosed this morning it would partner with Bain/Apax to bid for PT Portugal. Semapa says it would likely acquire a 5%-10% stake in a deal.
Sun, Nov. 30, 4:44 PM
- French cable giant Altice has agreed to buy Oi's (NYSE:OIBR) Portuguese ops for €7.4B ($9.2B), Reuters reports. Bloomberg reports Altice is "close to reaching an agreement," after having beaten out a bid from P-E firms Apax and Bain.
- A Reuters source says Oi and Altice will soon announce they're entering three weeks of "exclusive talks and due diligence" to finalize the deal, which would serve to unravel Oi's merger with Portugal Telecom (NYSE:PT). PT's main asset is a minority stake in the combined company.
- Selling the Portuguese assets could pave the way for Oi to merge with Brazilian rival TIM Participacoes (NYSE:TSU), or to partner with two other rivals - Telefonica's Vivo (NYSE:VIV) and America Movil's Claro - in acquiring and breaking up TIM. TIM parent Telecom Italia (NYSE:TI) has reportedly been weighing a deal with Oi.
Fri, Nov. 21, 3:48 AM
- Telecom Italia (NYSE:TI) will likely sell the mobile phone towers of its Brazilian unit TIM Participacoes (NYSE:TSU) to American Tower (NYSE:AMT) for almost €900M ($1.1B), says Reuters quoting two sources.
- Yesterday, Telecom Italia was reported to be weighing a deal between TIM and Brazil's Oi (NYSE:OIBR), saying it would ask its board for support today to "explore a potential transaction".
- Previously: Oi, PT rally; Telecom Italia reportedly weighing deal
Thu, Nov. 20, 4:03 PM
- Bloomberg reports Telecom Italia (TI -1.4%) will ask for board support tomorrow to "explore a potential transaction" between TIM Participacoes (TSU -0.8%) and Brazilian rival Oi (OIBR +5.7%). Both Oi and merger partner Portugal Telecom (PT +2.8%), whose main asset is a stake in the merged company, have rallied.
- TI was rumored to be interested in Oi in September, but quickly responded by saying it's not in talks with the carrier.
- Meanwhile, multiple bids have been made for control of Portugal Telecom, and a report has also surfaced that all three of TIM's rivals (including Oi) want to buy the company and break it up in order to consolidate Brazil's slow-growing mobile market.
Mon, Nov. 17, 7:29 AM
- Telecom Italia (NYSE:TI) says is not studying a new share sale, dismissing reports that it was considering raising cash from investors to fund an acquisition in Brazil.
- Last week, Telecom Italia's chief exec Marco Patuano said he was ready to explore the possibility of buying rival Brazilian Oi (NYSE:OIBR).
- The board of Telecom Italia is also expected to meet this week to discuss the options for TIM Participacoes (NYSE:TSU), its majority-owned Brazilian subsidiary.
Thu, Nov. 13, 9:29 AM
Mon, Nov. 10, 2:31 PM
- Terra Peregrin, a holding company controlled by Isabel dos Santos (the daughter of Angola's President and Africa's wealthiest woman), has offered €1.35/share ($1.69/share) for a controlling stake in Portugal Telecom's (PT +7.2%) holding company, which in turn owns 25.7% of Portugal Telecom and Oi (OIBR +3.8%) post-merger.
- The bid comes after France's Altice offered €7B ($8.8B) for PT's Portuguese assets (PT Portugal), thereby seeking to unravel the PT/Oi merger. For now, Oi is dismissing dos Santos' offer, stating it considers "inopportune any change in the previously agreed terms of definitive contracts."
- Analyst Javier Borrachero thinks dos Santos' bid appears to be "an opportunistic offer simply to delay or hamper the potential sale of PT Portugal." He estimates Altice's offer values PT at €1.50/share ($1.88/share).
- PT has rallied to $1.63. Oi is also up, but remains below $0.50.
Fri, Oct. 31, 10:14 AM
- Brazilian paper Folha de S. Paulo reports America Movil (AMX +1.6%), Telefonica's (TEF +1.2%) Vivo (VIV +4.9%), and Oi (OIBR +12.3%) have agreed in principle to pay R$31.5B ($13.1B) to acquire and break up TIM Participacoes (TSU +8.6%), Telecom Italia's (TI +2.9%) Brazilian unit.
- The paper adds a formal offer will be made to TI shareholders. TI chairman Giuseppe Recchi says his firm hasn't yet received an offer. TIM's market cap is currently at $12.5B.
- AMX would reportedly keep 40% of TIM, Telefonica 32%, and Oi 28%. Rumors of a joint bid have been around for weeks, as Brazilian carriers dealing with slowing growth and price wars bet consolidation will improve their fortunes.
- Markets are responding well to the report. Oi merger partner Portugal Telecom (PT +8.9%), whose main asset is a stake in the combined company, is also rallying.
Fri, Oct. 24, 10:06 AM
- The FT reports P-E firms Bain and Apax Partners are weighing offers for Portugal Telecom (PT +3.7%). Both PT and merger partner Oi (OIBR +6.1%) are rallying in early trading.
- French cable giant Altice has also been reported have interest in acquiring PT, and thus undoing the Oi merger. Shares of both companies have cratered this year, thanks in part to the Rioforte debt scandal.
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.
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