Telefonica intends to use its own resources to finance the transaction
Telefonica Brasil, TIM and Claro (América Móvil) have managed to acquire the mobile phone assets of the Brazilian Grupo Oi for some 16,500 million reais (about 2,656 million euros) after the consortium formed by the three operators has finally been the only participant in the auction conducted by Oi.
In the absence of official confirmation of the result of said auction, the acceptance of Telefónica, TIM and Claro’s offer by Oi was foreseeable after the withdrawal of the Brazilian infrastructure company Highline do Brasil, owned by the US fund Colony. Capital.
Telefonica and its partners signed an exclusivity agreement with Grupo Oi in August to negotiate the sale of the Brazilian company’s mobile telephony assets, which was intended to guarantee the security and speed of negotiations between the bidders and the Brazilian society .
Subsequently, the three companies managed to gain the qualification of ‘stalking horse’ (first bidder) in the phase prior to the auction, which gave the consortium the right, at its sole discretion, to cover the highest value offer that could be presented in this competitive process.
The offer of 16,500 million Brazilian reais (2,656 million euros) includes 756 million Brazilian reais (122 million euros) for temporary services that will be provided by Grupo Oi to bidders for a period of up to 12 months , as well as such as the commitment to enter into long-term contracts for the provision of transmission capacity services through its infrastructures.
Telefónica will disburse an amount corresponding to 33% of the base price , equivalent to 5,500 million Brazilian reais (about 884.5 million euros), for temporary services , as well as an amount of 22% of the net present value of the agreement, about 179 million Brazilian reais (about 28.79 million euros), for the capacity agreement.
As reported to the Brazilian Securities and Exchange Commission (CVM) , the Spanish company (Telefonica) intends to use its own resources to finance the transaction.
In presenting the offer, Telefónica reaffirmed its interest in acquiring the mobile business of the Oi group and in “contributing to the continuous development of mobile telephony” in Brazil. In addition, he indicated that the offer favors and is in line with the regulations that aim to build and consolidate “a strong and efficient” mobile phone service in the country.
Oi, the fourth mobile telephony operator in Brazil, announced last June that, within the framework of its restructuring process, it was going to carry out the segregation of its assets, liabilities and recovery rights from associated entities into four Isolated Production Units (UPI, for its acronym in English).
In the case of the mobile assets unit, Oi detailed its intention to sell 100% of the company through an auction process , which was scheduled for this fourth quarter of 2020, as has finally happened, with a minimum price of 15,000 million reais (about 2,540 million euros), which must be paid in cash.
Highline do Brasil initially presented the best economic offer for mobile assets, thus surpassing that made by Telefonica, TIM and Claro, which led the company to sign an exclusivity agreement with Oi. However, the negotiations between both parties did not come to fruition and Oi began talks with the consortium that did lead to his appointment as the first bidder.