Telefónica submitted a binding offer to acquire, together with Telecom Italia (TIM) and Claro (Mexico), the mobile business of the Oi Group, as reported by the Spanish company in a relevant event to the National Securities Market Commission (CNMV), stock exchange supervisor Spanish.
The buy offer It has been done through the subsidiary Telefónica Brazil and, in the process, Telefónica will have the right to match the best purchase offer for the mobile business of Hi, as the first bidder (‘stalking horse’).
Telefónica points out that this offer is part of the roadmap established last November and that places Brazil among the company’s priority markets, along with Spain, the United Kingdom and Germany.
He spanish group believes that the operation will generate value through greater growth, generation of operating efficiencies and improvements in service quality, and that it will contribute to the development and competitiveness of the Brazilian telecommunications sector.
Last July 16 Telecom It granted “full powers” to its CEO, Luigi Gubitosi, to examine and approve the final conditions of the binding offer for the Brazilian operator’s mobile phone business.
On June 17, Hi He indicated that the minimum price of its mobile phone network assets is 15,000 million reais (2,538 million euros, US $ 2.85 million) and that it would sell them to the highest bidder.
The competitive auction will be held in the fourth quarter of the year -a previous meeting of creditors in August-, although the market sees strong probabilities that there will be no more bids, as the three main operators in the Brazilian market have joined forces.
For Vivo, the brand of Telefónica In Brazil, an operation of this type reinforces its position as leader in that country’s mobile market, by incorporating clients, spectrum and network assets, mainly towers, which will be key to maintaining a high quality of service in all technologies, according to market sources.
From the company they admit that intra-market consolidation in Brazil is possible, but that none of the three great players could do it alone, so they highlight that the proposal they have put on the table allows us to intelligently address the distribution of spectrum and other assets, like customers.
Failing to materialize, the operation will contribute to the development and competitiveness of the Brazilian telecommunications sector, while implying a good solution for Hi, in bankruptcy since 2016.
The operation, launched just one month after Oi set the minimum price for its mobile assets and its plan, without Latin America There is still talk of new normality, it implies achieving significant spectrum synergies, network and commercial efficiency.
Regarding its financing, the strong cash generation capacity (FCF) of Telefónica Brazil, low indebtedness and attractive interest rates, according to sources.
In the accumulated of 2019, the cash flow reached 8.2 billion reais (about 1,332 million euros), 19% more than the previous year, while in the first quarter of 2020 it added 2,120 million reais (about 344 million euros) and grew 81.9% year-on-year.
Fitch just assigned this month to Telefónica Brasil / Live a long-term national rating of “AAA” with a stable outlook.
The agency justifies it in a solid business model, its leadership position in the Brazilian telco market and a financial profile characterized by solid liquidity and low leverage.
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