Speculation about the sale of Hi are not over: the Spanish newspaper Expansion reported that rivals sure, TIM and Live are coming together to buy the operator’s assets under judicial reorganization. The idea would be to carry out a joint acquisition to soon divide the shares between the three giants.
The news, from the same group as The world, does not describe which assets would be purchased and cites that an agreement between all operators is highly complex.
Although it denied any negotiations in progress, Oi did not rule out a possible sale of the mobile arm during the last disclosure of the financial statement. Speculation has been going on for some time. In September, TIM denied any negotiations, while Vivo was to confirm with the Spanish parent company whether there was any intention to buy all or part of the Brazilian competitor.
The rumors circulate at a time of difficult financial health for Oi. The operator has been facing a judicial reorganization process since 2016, with debts exceeding R $ 65 billion. Oi managed to restructure debts by converting creditors’ bonds into shares. In the financial results for the second quarter of 2019, net debt was R $ 12.5 billion and the operator had a loss of R $ 1.5 billion.
Difficulties to incorporate Oi
Any type of merger or incorporation must follow regulatory and competition procedures. In the report on the incorporation of Nextel by Claro, Cade already sent the message that the existence of only three large mobile operators could result in a kind of “cartel”.
In addition, the current legislation establishes that each provider has a maximum of 172 MHz of spectrum in a municipality, and can be extended to 181.12 MHz upon authorization from Anatel. TIM is the only operator that is below the extended limit, while Claro and Vivo would exceed the ceiling in several of the regions.
But as Oi (still) operates with the concession model for fixed telephony, the government would have to assume if the operator runs out of money, preventing millions of customers from going without communication.
In August, the State of S. Paulostated that Oi was at “imminent risk” of Anatel’s intervention, but the statements were contradicted by the agency’s president, who prefers a “market solution”. O Expansion he said the government should “relax” regulation for sale and merger, and the current situation seems to be more than enough reason for this to happen.
Operator needs cash on hand
Oi’s cash flow reached the “necessary minimum”, and the operator needs to raise R $ 2.5 billion to avoid running out of money in 2020. To survive and put into practice the fiber optic expansion plan for 16 million households by 2021 , the operator found the following outlets: sale of non-strategic assets, such as towers, real estate and data centers; sale of the 25% stake in the Angolan operator Unitel; and issuance of debt securities (debentures) in the amount of R $ 2.5 billion.