Telecom Italia is reviewing a possible deal with Brazilian operator Oi and formalised its interest in local fibre provider Metroweb, the operator has announced.
The Italy-based operator released a statement confirming it is actively looking into a number of possible scenarios regarding Oi, which is currently trying to offload Portugal Telecom after a troubled merger.
TI said its Board of Directors had “empowered management to examine in depth the options for a possible integration” with Oi.
The operator is looking at Oi after Telefónica beat it to the acquisition of Brazilian fixed-line operator GVT in September.
The statement continued: “The next steps, if there are to be any, will be submitted to the Board for approval, following the opinion of the Committee of Independent Directors.”
The announcement comes two weeks after CEO Marco Patuano said that he was open to the possibility of acquiring Oi to help strengthen TIM Brasil’s market position.
Last week, Telecom Italia denied claims that it is planning to raise cash to fund an acquisition in Brazil.
However, it has announced it is selling over 6,400 telecommunication towers in Brazil to the American Tower Group for over €900 million.
Rick Mattila, Telecom Analyst at the investment banking arm of Mitsubishi UFJ Financial Group commented: “The key issue remains the nature and funding of any combination between Tim Brasil and Oi in Brazil.
“Although Italian press reports previously have suggested that majority ownership is a condition for Telecom Italia, such conditions were not mentioned in the press release.
“We would be surprised if Oi agreed to a minority role and, as such, regard a joint venture of equals as a more likely outcome. This would likely require a cash component from Oi to Telecom Italia. This could be funded by Oi’s potential asset sales in Portugal and Africa.
“The ultimate end result for Telecom Italia could then be a marginal improvement in consolidated leverage, while retaining a foothold in the Brazilian market.”
Earlier this month, it revealed revenues in Brazil fell 3.1 percent to €1.6 billion during the third quarter.
Meanwhile, TI said it had sent a proposal to asset management company F2i Sgr regarding the acquisition of Italian fibre network provider Metroweb.
TI said it wanted to start discussions about acquiring a controlling stake in the company, which operates a large fibre optic network, “as soon as possible”.
The operator said Metroweb had been identified as the partner with which it could quickly create the development plan for a new national fibre network.
“Collaboration between the two companies would represent an important element to speed up the technological development of the ultrabroadband network, through the creation of FTTH and FTTB infrastructure,” TI said in a statement.
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