03/10/2006
The consolidation of the operators in Brazil. Who's gonna buy?
The possible sale of Tim's operations in Brazil, is another part in the complex game of consolidation that happens with Brazilian Operators in which the following groups have defined positions:
- Telefonica, is the biggest telecom group in Brazil, working with fixed telephony, cellular and communication of data. It also thinks of working in the segment of Pay TV, having requested to Anatel a license for DTH (satellite). At the moment, its main priority is to buy the participation of Portugal Telecom (PT) in Vivo. Portugal Telecom must reduce its presence in the Brazilian market in case of Sonaecom materialize its sale.
- America Móvil and Telmex, owned by Carlos Slim (Mexican business man), are proprietors of Claro ( Embratel) and have a participation in the Net. Claro, which is the only one between great cellular operators, not having stocks negotiated in the São Paulo Stock Exchange (Bovespa). Embratel launched a public offer to close the capital.
- Telemar is having a joint venture reorganization that must lead to a spraying of stocks (more details). This will make the company to become enlarged itself.
Most of the changes in the shareholding controls of the operators is related to a shared space by Telecom Italia, Citi, Pension Fund and Opportunity. Two facts must speed up this process:
- Substitution of the Opportunity in the management of Telemig and Amazônia Celular. The assemblies realized in 09/28/06 (more details) indicate that the exit of Opportunity of the management of these operators is close, opening way for its sale. These operators don't have enough scale to continue acting separately in the Brazilian market and keep having its position corroded by the competition. Telemig presented cellular growth of 1.8% in the 1st semester of 2006 and Amazônia is the only Band A operator that isn't market lider in its area. Vivo appears as the main candidate to buy Telemig, and Claro to buy Cellular Amazônia.
- Day 10/28/06 wins the stated period of 18 months given by Anatel so that Telecom Italia and BrT eliminate the duplicity of existing authorizations in the long distance and between Tim and BrT GSM. In the current context, the most easy solution for the conflict would pass the participation sale of the Telecom Italia in this operator. The problem seems to be the lack of interested parties. Citi and Pension Funds also would like to sell its participation. The exit for BrT can pass for a spraying of stock in the Stock market, the example of the proposal presented by Telemar to its shareholders. In case that a solution doesn't appear, Anatel can determine the removal of Telecom Italia of the BrT group control. An alternative would be the temporary removal of the Telecom Italia, for proper initiative, of the Brazil Telecom group control, with the transference of its stock in the company to trust until it definitive solution, as it occurred in the CRT, when Telefônica didn't fulfill the determined stated period by Anatel.
The process of Cellular operators privatization (Band A) and licitation of licenses (Band B) in 1997/1998 had attracted some interested parties, the following groups had acquired significant participation in companies: Telefonica, Portugal Telecom, Telecom Italia (Tim), America Móvil, the Bells South, CTBC, Opportunity, Telia, Splice, Citi Bank, Pension fund and Bell Canada.
With the licitation of Bands D and E it was consolidation phase of regional cellular operators of national presence, main ones: Vivo (Telefonica and PT), Tim and Claro (America Móvil). Oi and BrT had also appeared associated to the concessionaires of local fixed telephony. This process has had as consequence the exit of the telecom sector in Brazil, some groups as Bell South, Telia and Bell Canada. The current round of consolidations can imply in the exit of other groups as Portugal Telecom. The situation of the following groups is still indefinite:
- Opportunity was moved away from the management of BrT in 2005 and is also leaving the management of Telemig and Amazônia Celular. Although moved away from the management, Opportunity continues with minority participation in these companies and in the Telemar.
- Telecom Italia is with problems of high indebtedness in the matrix and can sell its participation in the BrT and even though Tim in Brazil in case of getting a good offer.
- Citi and Pension Funds would like to sell its participation in the BrT. In the lack of purchasers, the adopted way can be the same of Telemar with the proposal of spraying stocks in the São Paulo Stock Exchange (Bovespa). In this case, the sale of Telemig and Amazônia Celular makes more sense than the incorporation of these operators to the BrT.
We can't forget the entrance of new investors from: financial market or international operators. (Teleco Commentary)
The consolidation between the great groups that dominate fixed and cellular telephony in Brazil didn't take off the space to operators of lesser transport as CTBC, Sercomtel, Nextel, Intelig and GVT. The success of these operators depends on the performance where they can give different services. The magnifying of this must occurs as sprouting of virtual mobile operators (MVNOs).
Looking at the text above you could ask:
- Which will be the attitude of Anatel case BrT and Telecom Italia doesn't decide the duplicity of authorizations untill 28/10/06?
- Opportunity e Telecom Itália irão deixar o setor de telecomunicações no Brasil? O Opportunity aceitará uma posição de coadjuvante sem participação no controle das empresas?
- Will Opportunity and Telecom Italia leave the sector of telecommunications in Brazil? Will Opportunity accept a position without participation in the control of the companies?
- Will Citi/Pension Funds sell telemig and Amazônia Celular or incorporate these actives to BrT?
- Are there new investors interested in the Brazilian market of fixed and cellular telephony?
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