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.
TIM Participacoes' Disposal Draws The Market's Attention
- Oi, Telefonica and American Movil allegedly in discussions to buy TIM Participacoes.
- A competitive process ahead of September 30th might push the stock upwards.
- Anticompetitive / market power abuse issues might arise.
Update: TIM Participações Q2 '14 Earnings Show Potential For DevelopmentAntonio Carradinha • Aug. 1, 2014
- TIM is an important player in Brazil's mobile telecommunications business.
- The role of Telefonica is crucial to understand TIM's future.
- As I have mentioned in my original article TIM's strong market position may determine several options including a takeover.
TIM Gets An Unexpected Catalyst: Sale To The Liking Of Authorities, 40% Upside
- Telecom Italia, which has been experiencing financial problems, holds a 67% stake in TIM, the second-largest Brazilian telecommunications company.
- TIM is having a good performance, especially when compared to its peers, and its value may increase accordingly.
- Telefonica dominates the management of Telecom Italia; considering that it also owns VIVO, leader of the Brazilian market, Anatel wants a quick solution in terms of market consolidation.
- TIM shareholders are in a winning position. While there is the option of joining with GVT, the most likely outcome is the sale and division of assets by its rivals.
- If Telecom Italia agrees to sell all of TIM's assets in parts to its peer group, share prices will tend to rise consistently. Valuation of ~$16B leads to 40% upside.
Thu, Jan. 22, 4:00 PM
- Portugal Telecom (PT +17.9%) shareholders have signed off on the $8.7B sale of Oi's (OIBR +20.1%) Portuguese assets to Altice.
- With the sale approved, debt-laden Oi is expected (perhaps with the help of rivals) to turn its sights on acquiring part or all of TIM Participacoes (TSU +2.9%), thereby cutting the number of Brazilian mobile carriers to three.
- Earlier: Oi, PT surge as Portuguese vote looms
Dec. 18, 2014, 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
Dec. 16, 2014, 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
Dec. 12, 2014, 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.
Dec. 10, 2014, 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.
Dec. 9, 2014, 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.
Nov. 30, 2014, 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.
Nov. 21, 2014, 6:36 PM
- American Tower (NYSE:AMT) is buying 6,480 towers from TIM Participacoes (NYSE:TSU) for R$3B ($1.2B), slightly more than the ~$1.1B previously reported by Reuters. AMT "intends to finance the acquisition in a manner consistent with its previously announced leverage targets."
- The towers are expected to produce R$435M/year ($171M/year) in revenue, and R$191M/year ($75M/year) in gross margin. TIM has agreed to 20-year leases for the towers, and will act as their anchor tenant.
- AMT has already bought Brazilian towers from NII Holdings, and acquired local tower owner BR Towers. The company also bought 666 Brazilian towers in 2011, a transaction Muddy Waters took aim at.
- Altogether, AMT owned/operated 69.5K towers at the end of Q3.
Nov. 21, 2014, 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
Nov. 20, 2014, 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.
Nov. 17, 2014, 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.
Oct. 31, 2014, 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.
Oct. 31, 2014, 9:06 AM
Oct. 1, 2014, 7:04 PM
- With carriers turning cautious amid slowing subscriber growth and intense price pressure, R$5.8B ($2.4B) was spent during a closely-watched auction for Brazilian 4G spectrum, far less than the R$8B the government was hoping to raise.
- America Movil (NYSE:AMX) bought a chunk of the airwaves, as did Telefonica's (NYSE:TEF) Vivo (NYSE:VIV) and Telecom Italia's (NYSE:TI) TIM Participacoes (NYSE:TSU). Oi (NYSE:OIBR), looking to strengthen its balance sheet follow the Portugal Telecom deal, decided to pass.
- All 4 carriers have been the subject of M&A intrigue in recent months. Oi has reportedly been looking to merge with TIM, while TI is believed to have mulled a takeover of Oi. AMX says it's interested in partnering with Oi on a bid for TIM, and Telefonica has struck a deal to buy Brazilian wireline carrier GVT.
Sep. 29, 2014, 9:43 AM
- Brazil's real falls to a five-year low and Petrobras (PBR -11.1%) plunges more than 10% at the open after a new poll showed Pres. Rousseff widening her lead over opposition candidate Marina Silva.
- The real dropped 2.1% in early trading, and the currency has tumbled 11% so far in Q3 with volatility increasing as the Oct. 5 presidential vote approaches.
- Over the weekend, Rousseff rejected rumors of soliciting funds from PBR for her campaign in 2010.
- ITUB -7.6%, BBD -6.8%, GOL -5.4%, GFA -4.8%, BRFS -3.7%, VALE -2.8%, TSU -2.4%, BSBR -2.1%, SID -1.8%, ERJ -1.6%.
- Brazil ETFs: EWZ, BRF, BRXX, EWZS, BRAQ, BRZU, BRAZ, BZQ, BRAF, UBR, BRZS, DBBR, FBZ
Sep. 17, 2014, 9:34 AM
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