Oi, the huge Brazilian carrier that plans to be big enough to face foreign competition, has entered into a Memorandum of Understanding with Portugal Telecom (PT) to form a combined entity named CorpCo. The merger which will unite the shareholders of Oi, Portugal Telecom and Telemar Participacoes S.A. (TelPart), and combine the activities and businesses developed by Oi in Brazil and Portugal Telecom in Portugal and Africa.
The Oi and PT merger creates a U.S.$17 billion telecom giant which aims to be more competitive against Vivo, the Brazilian unit of Spanish Telefónica; and against Telecom Italia’s TIM and América Móvil’s units in Brazil: Claro, Embratel and Net.
According to Frost & Sullivan, the move helps enhance Oi’s competitiveness in the Brazilian market. The merger could reinforce Oi’s operations, since its level of indebtedness impacted its ability to be more competitive. “We expect more aggressive commercial activities in the country and increasing investments in infrastructure,” said José Roberto Mavignier, ICT director at the consultant firm.
In a video-conference, Zeinal Bava, Portugal Telecom chief executive officer and Oi president, said the new company will have access to capital at much more competitive prices. “It will definitely attract many investors,” Bava said.
The companies expect that the merger will enable CorpCo to generate operational and financial synergies with a net present value of approximately R$5.5 billion (U.S.$2.5 billion). CorpCo should also benefit from the increased scale and from the companies’ leading positions in the Portuguese and Brazilian markets.
Marceli Passoni, senior analyst at Informa Telecoms & Media, said that the merger will benefit both companies, since the European telecom market is shrinking, and Africa and Brazil offer good opportunities for PT to continue growing its business. She added that Brazil is the world’s fifth-largest mobile market, and joining forces with PT will allow Oi to put more pressure on handset manufacturers and network equipment suppliers to offer discounts, reducing costs.
Colombian merger finalized—Millicom and EPM have completed the full documentation of the merger agreement for the combination of their Colombian telecommunications and media businesses. This follows the announcement of a July agreement in principle. Provided the regulatory review concludes positively, the newly-merged integrated company is expected to create a business offering a comprehensive range of bundled digital services to millions of households including mobile and fixed telephony, mobile and fixed broadband and pay-TV. The new company can potentially exploit the complementary geographic coverage and commercial offerings of UNE, EDATEL, ETP and Tigo, and implement a key component of Millicom’s strategy to double revenue by 2017 and increase profits.
Smartphones in Mexico—The share of smartphones in the Mexican telecom market is increasing. At the end of second quarter 2013, smartphones reached a penetration of 28.11% of mobile lines and rose to 31.3% in the third quarter. BlackBerry kept its leadership with 26.9% of the market; however, it lost market share to competitors such as Samsung.
LTE in Honduras—Claro and Tigo won a block of 20 MHz in the 1700-2100 MHz (AWS) frequency bands in the 4G spectrum tender in Honduras held by the country’s National Telecommunications Commission (Conatel) in August. The operators paid approximately U.S.$24 million. A third block of 40 MHz was reserved for the state-owned operator Hondutel. The telecoms have 18 months to commercially launch LTE services in at least ten of Honduras’ largest cities.
Pay-TV joint venture—EchoStar Technologies LLC and Vivendi Brazil’s subsidiary GVT have entered into negotiations to form a joint venture for pay-TV services in Brazil. They aim to increase market share in the fast growing Brazilian pay-TV market by offering a national service based on IPTV and satellite. The deal is subject to execution of definitive agreements as well as all corporate and governmental approvals.
More news from Latin America:
- The tower companies American Tower, BR Towers, SBA Torres and Grupo TorreSur have joined together to create an association in Brazil to manage their interests, mostly in regard to the antenna legislation which is under evaluation in the Brazilian congress.
- After Telefónica’s move to increase its share in Telco, Franco Bernabè has resigned as executive chairman of Telecom Italia.
- Honduras’ CONATEL postponed the number portability implementation process to the end of this year.
- Chilean telecom regulator Subtel has launched a 700 MHz spectrum tender for the provision of LTE services.
- Americatel, a subsidiary of Entel Chile in Peru, will invest about U.S.$400 million within ten years to deploy LTE in the country.
- Brazil reached 268.44 million mobile lines in August. LTE accounted for about 400,000 accesses—GSM still represents the major share with 175,120,172 lines. Brazil had 114 million Internet broadband accesses by August. According to Telebrasil, of the total, 21.5 million were fixed accesses.
- The emergence of the Asia-Pacific and Latin American regions is set to challenge European and North American operators’ early lead, said Analysys Mason principal analyst Chris Nicoll. He also noted that the large number of frequencies that LTE supports has generated concern among industry players. In practice, operators often need to support fewer than seven to provide a wide range of services for their users.
Be sure not to miss what’s happening in Latin America’s wireless markets. Check out RCR Wireless News wrap ups.
