Will Portugal Telecom change Vivo for Oi (Telemar)?
Telefonica has published several times that its main objective in Brazil is to get Portugal Telecom participation (PT) in Vivo controlling the operator. PT has been avoiding Telefonica offers, but everything indicates that sooner or later business is gonna be done.
Portugal Telecom already published that do not pretend to get out of Brasil. Vivo represented 33% net revenue 6.3 billion euros of PT in 2006. PT consolidates in its results 50% of Vivo's revenue, proportional value to its participation in the operator.
In 1st quarter 2007 (1Q07), with spin-off of PT Multimedia (PTM), Vivo has been representing 37.4% of Portugal Telecom's net revenue.
| 1Q07 - Millions Euros | Net Revenue |
EBITDA |
EBITDA Margin |
| Fixed Network | 499 |
240 |
48% |
| Móvel Portugal - TMN | 363 |
161 |
44% |
| Móvel Brasil - Vivo* | 546 |
151 |
28% |
| Others and Eliminations | 52 |
19 |
37% |
| Total | 1,461 |
571 |
39% |
* Consolidates 50% of Vivo Net Revenue
Vivo is also growing business. Fixed network had decrease of 6% revenue in the 1Q07, comparing to 1Q06, and cellular market of Portugal is saturated with density of 117 cell/100 inhab.
According to this situation, its very clear the need of Portugal Telecom, in case stops the participation in Vivo, to acquire another active. The international presence of PT is concentrated in portuguese language countries: Brazil, Guiné Bissau, Cabo Verde, Moçambique, Timor and Angola.
Oi (Telemar) or Brasil Telecom would be actives which could replace Vivo.
| 1Q07 - Thousands R$ | Vivo |
Oi (Telemar) |
BrT |
| Market Value | 14,808 |
15,255 |
9,816 |
| Net Revenue | 2,851 |
4,305 |
2,691 |
| EBITDA | 757 |
1,449 |
952 |
| EBITDA Margin | 27% |
34% |
35% |
| Profit | (19) |
343 |
170 |
The press published some news which indicates PT's preference for Oi and the " operation would have minimum investment of 3.5 million euros ". PT debt in the 1Q07 was 3.6 billion euros.
A possible acquisition of Oi would put down the project of national operator with joint venture of Oi and BrT. Another possibilty would be the creation of a luso brazilian operator.
Whatever, the situation would continue being consolidations and big groups. Telefonica and América Móvil/Telmex already have their places in the brazilian market. Will have a third group?
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