An investment group has offered to plough US$4 billion (€3.6 billion) into Brazil’s Oi if it merges with local rival TIM Brasil.
Letter One, which was founded by Russian billionaire Mikhail Fridman, made the offer late last week via BTG Pactual, the investment bank that Oi hired to advise it on its options regarding a possible move for TIM over a year ago, the Brazilian telco revealed on Monday.
The investment group proposed holding exclusive negotiations with Oi with a view to bringing about a business combination with TIM, Oi said. Should that consolidation take place, Letter One would be willing to make a capital contribution of up to $4 billion in Oi.
Oi gave no indication as to whether it is in favour of the proposal, but said it will carefully evaluate it, along with its legal and financial advisors.
TIM Brasil, meanwhile, said it is not holding discussions with Oi or Letter One regarding any tie-up.
It made a similar assertion earlier this month when Brazil’s Valor Economico claimed that BTG Pactual, Letter One, Fridman, and TIM had held frequent talks about a possible merger.
At the time, the newspaper speculated that the value of any deal could exceed 50 billion reais (€11.4 billion).
Talk of a merger between Oi and TIM has resurfaced multiple times over the past couple of years.
TIM is the second largest player in the Brazilian mobile market, but being without a significant fixed-line business leaves it at risk of being left behind as the market moves towards quad-play and converged services.
Oi is the smallest of Brazil’s big four mobile network operators. It had a market share of 17.9% compared with TIM’s 26.2% and market leader Vivo’s 29.1% at the end of August, according to data provided by regulator Anatel.
However, Oi leads the fixed-line market, claiming 35.3% share at the same date, and comes second to Claro in the broadband space with 25.5% share.
A full merger between Oi and TIM could raise some competition concerns, giving their collective size in the mobile market, but there has been speculation that some of TIM’s assets could be sold off to rivals Vivo and Claro as part of any deal.
