RIO DE JANEIRO/MILAN: A group of Brazilian telecoms operators are now ready to bid for rival TIM Participa??es SA, a source with knowledge of the situation said, after the group's leader, Oi SA, got the go-ahead to sell its Portuguese business.
However, top management at Telecom Italia SpA, TIM's majority owner, is preparing for a meeting with Brazilian officials next week to put out feelers before deciding whether to turn the tables and make their own bid for Oi, two other sources familiar with the plans said.
Shareholders at Oi's merger partner Portugal Telecom SGPS finally approved the 7.4 billion-euro ($8.3 billion) sale of PT Portugal to European rival Altice SA on Thursday, despite stiff opposition from minority shareholders.
With that hurdle cleared, the first source said Oi and the Brazilian units of Mexico's America Movil and Spain's Telefonica can move ahead with a joint offer for TIM, coordinated by investment bank Grupo BTG Pactual SA.
A firm offer would be the culmination of more than a year of negotiations as Brazil's four mobile network operators seek a consolidation of the national market, where costly investments are squeezing profits.
Two sources with direct knowledge of the matter said in October that the BTG-led group had agreed to place a joint bid of around 32 billion reais ($12.4 billion) to acquire TIM and split its operations three ways.
Telefonica Brasil declined to comment, while representatives for TIM and America Movil subsidiary Claro could not be reached for comment.
But Oi, owner of the country's biggest fixed line network but the smallest of the four mobile operators, said on Thursday the sale of PT Portugal would strengthen its balance sheet and help it to participate in the consolidation of the Brazilian market.
The Altice deal should reduce Oi's net debt to around $9.7 billion, from about $17.1 billion at the end of last year, according to a note from Goldman Sachs. However, many investors remain sceptical that Oi can pay its share in an aggressive bid.
"The company has no cash and it's not able to buy anyone with that much leverage," said Celson Placido, a strategist at XP Investimentos. "It would make more sense to be bought." Telecom Italia has already said it is considering whether to buy or merge with Oi.
The Italians lost out to Telefonica in a bidding war for Brazilian broadband company GVT last summer, leaving TIM Participacoes, the country's second-biggest mobile operator, in a weaker position than its rivals as fixed and mobile services consolidate.
Now, Telecom Italia's chief executive Marco Patuano will meet Brazil's new telecommunications minister Ricardo Berzoini next Thursday to seek assurance that the government would not oppose a possible bid for Oi, one of the sources said.
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