News • Today, 6:36 PM
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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.
- 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 • Fri, Aug. 1
- 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.
Today, 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.
Today, 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
Yesterday, 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.
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. 31, 9:06 AM
Wed, Oct. 1, 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.
Mon, Sep. 29, 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
Wed, Sep. 17, 9:34 AM
Tue, Sep. 16, 12:26 PM
- 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.
Tue, Sep. 9, 11:12 AM
- 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.
Wed, Aug. 27, 11:08 AM
- 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.
Wed, Aug. 27, 9:12 AM
Wed, Aug. 20, 2:33 PM
- Brazilian paper O Estado de S. Paulo reports Vodafone (VOD -0.8%) is mulling an acquisition of TIM Participacoes (TSU -0.5%), Telecom Italia's (TI -0.1%) Brazilian mobile/wireline unit.
- The paper states Vodafone, hungry to expand after receiving its Verizon Wireless windfall, would prefer to enter Brazil by taking a majority stake in one of the country's 3 top mobile carriers - giants Telefonica and America Movil control the other two - rather than by participating in an upcoming 4G spectrum auction.
- TIM is estimated to have 26.9% of the Brazilian market, Telefonica's Vivo 28.7%, and America Movil's Claro 24.9%.
- TI's own M&A plans could stand in the way of a Vodafone offer: The Italian carrier is reportedly weighing a bid to acquire Brazilian wireline carrier GVT, with the goal of trumping an existing offer from Telefonica and merging GVT with TIM.
Tue, Aug. 19, 3:26 AM
- Telecom Italia (NYSE:TI) will hold a board meeting next week to discuss its offer to acquire Vivendi's (OTCPK:VIVHY) Brazilian broadband unit GVT. The meeting will likely be held on Aug. 27.
- "Certainly nothing will happen this week," says a source.
- Previously: Telefonica upping GVT offer by bundling content deal
Mon, Aug. 18, 2:44 PM
- Reuters reports Telefonica (TEF +0.2%) will include a TV content-sharing deal as part of its offer to Vivendi (OTCPK:VIVHY) for Brazilian wireline carrier GVT. A source states the revised bid is worth €7B ($9.4B), topping Telefonica's prior €6.7B offer.
- Bloomberg has reported Telecom Italia (TI -1.8%) is willing to offer up to €7B for GVT. However, TI's offer is reportedly all-stock, whereas Telefonica is offering both cash and stock.
- In addition, analysts have noted Telefonica's Spanish pay-TV presence could appeal to Vivendi, which owns a sprawling media empire.
- Related tickers: VIV, TSU
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