Telefonica and TIM have united to make an offer to acquire Brazilian operator Oi's mobile business. The companies said they contacted Oi's advisor Bank of America Merrill Lynch to start the negotiations, and Oi confirmed an approach from unnamed third parties.
The news confirms repeated reports that Oi was looking to sell assets in order to strengthen its financial position. TIM Brasil said in a statement that the acquisition would not only create value in its own business but also "bring benefits to the telecommunications market in general, reinforcing its competitiveness and investment capacity".
The deal comes as the Brazil mobile market contracted over the past year in the face of the economic slowdown. No details were provided on how Telefonica, which owns Brazilian operator Vivo, and TIM would divide the operations.
Vivo is already the largest mobile operator with nearly a third of customers, while TIM is tied for second with Claro with around 24 percent. Claro, owned by America Movil, recently strengthened its position with the acquisition of the small mobile operator Nextel. Oi is last among the the big four operators, with a 16 percent share and around 37 million mobile customers.
A sale would give Oi much needed cash to pay down debt and invest in its fixed business. The company has said it wants to focus on expanding its fibre network to drive growth. The interest from the two operators follows a 'market sounding' by Oi's financial advisors over interest in its mobile assets.
