Telecommunication news updates

The businessman Carlos Slim knows that the purchase of Oi's mobile business is going to be fought in the regulatory arena. The transaction already has the names of the likely buyers: América Móvil, its telecommunications conglomerate, Telefónica and TiM. The other three rivals of the operator in bankruptcy have made the best offer, after the 'hare' that was presented at the start. The key will be in Anatel, the regulatory body for the telecom sector, and in CADE, the 'Brazilian CNMC'. For this reason, the group of the Mexican magnate has taken out the first artillery to pressure this week, insisting that the agreement complies with the regulations. He adds to the pressure exerted by the current CEO of the 'seller', Rodrigo Abreu: "What really matters is the market balance and there will be balance."

In this week's results presentation, América Móvil wanted to point out the most delicate point: customers. All regulatory bodies that do not look favorably on concentration operations like this seek justification in how it will affect the market offer and the service offered to subscribers. The company, which operates in Brazil under the Claro brand, points out that the consortium formed by the three groups is "the one that best serves the current interests of clients.

It should not be forgotten that if the purchase goes ahead for the three groups, which have offered more than 2,700 million euros in a second offer launched in mid-August, it will be reduced from four to three operators, which would go to control practically all of the current market. Oi has a mobile market share of 16% compared to 23% for Telecom Italia; 25% from Claro and 33% from Telefónica. Consequence? Between the three, almost 97% of all clients in the country will be distributed.

This consolidation process in the Brazilian market is the one that regulators will have to elucidate. And the CEO of Oi did not want to miss the opportunity to put the accent mainly on the equitable distribution that will take place thanks to the solution of the three-way consortium. He insists that there will be a market equilibrium and that, despite the fact that the process seems really complex, it involves the largest companies acquiring assets from a quarter of the same sector, something that should not be so problematic. Regardless of whether those who should decide think the same, it is clear that the executive team of the operator is totally in favor of it being them. Although Abreu and his team are not the ones who must decide, since the company is in a process of bankruptcy, so it must be the general meeting that groups them that gives the green light.

All parties begin to play their cards. The countdown is over, but there are still many months to go until the final end of the operation. As the directors of América Móvil made clear in the conference with analysts this Wednesday, the auction is expected to close definitively in the last days of this year 2020. "It will be at the end of the year," they say. But from the time the buyer is appointed until the transaction is concluded, many more months will pass, not only due to the authorizations of the regulators but also due to the distribution of the assets and their integration into the respective groups of Telefónica and its partners.

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After the proposal they made last August, and with which they were placed as a clear favorite, ensuring the right of first refusal in the unlikely event that there was a greater offer, the first contacts with regulators have already begun, as is as recognized by the CEO of Oi. According to the state news agency in the Rio de Janeiro country, Rodrigo Abreu assured that both the operator chaired by José María Álvarez-Pallete and the rest want to cut the deadlines and bring the authorization as close as possible, which is not expected before the summer of next year. "The leaders of the proposal have already begun to interact with the agencies to limit the process," he said.

While the auction in Oi is being elucidated, Telefónica still has two pending transactions. On the one hand, there is the failed sale of El Salvador to Carlos Slim after the regulator imposed harsh conditions due to the concentration in the country's market. The Spanish operator has not yet found a replacement. He did find it for the Costa Rican subsidiary after Millicom's refusal 'in extremis', which has led to a battle between both parties in court. These assets will be kept by the Latin American division of Liberty. However, after nearly three months, the country's competition regulator has yet to be notified.

These were operations that came from a sale that occurred in the first months of last year 2019, before Álvarez-Pallete presented the action plan in November. A plan that contemplates the progressive exit from Latin American territory with a partial or total sale of all assets. It has already carried out the operational 'spin off' and has been making progress in the corporate procedures. The holding company of all Hispam, which is based in Spain, has recently been converted into a public limited company.