Snapshot: The Brazilian telecom chessboard after the capture of Oi

Bnamericas Published: Thursday, December 24, 2020
Snapshot: The Brazilian telecom chessboard after the capture of Oi

The consolidation of the Brazilian telecommunications market after the acquisition of Oi by the three big players Vivo, Claro and TIM is unlikely to significantly change the status quo of the sector in terms of market share.

However, projections by some business consultancies and banks are that Vivo and Claro could possibly put some more distance between them and TIM in third place. This is because the division proposed will depend on how regulators will back the deal and how the market will look like in a few months’ time.

TIM had a 22.3% share of the Brazilian mobile market as of October, while Vivo had 33.6% and Claro 25.2%, according to regulator Anatel.

In the agreement between the trio, TIM, which has a smaller number of users and spectrum than its rivals, gets a larger slice of Oi.

The consortium agreed to pay a combined 16.5bn reais (US$3.19bn) for Oi's mobile operation, but TIM will disburse the highest sum of the three: 7.5bn reais.

The deal has yet to be approved by the antitrust agency Cade and that process could take up to a year.


The way the telcos suggested sharing out Oi’s customers in their joint bid was done considering the Brazilian mobile market as of April, with TIM taking 14.5mn of Oi's customers (39.7% of Oi’s total), Claro 11.7mn (31.6%) and Vivo 10.5mn (28.7%).

According to projections by consultancy Teleco, this would lead to the following market shares considering figures from October: Vivo (38.1%), Claro (31.6%) and TIM (28.6%).

Image source: Teleco

The consolidation would thus lead to smaller differences in market share between the three players in Brazil in terms of client base and spectrum, in the opinion of ratings agency Fitch.

"As for spectrum, Telefonica Brasil would reach an estimated 191MHz from the current 148MHz, while TIM would have 166 MHz, up from 117MHz. Claro's spectrum of 177MHz should not change following the acquisition, as the company is close to the spectrum cap defined by the local regulator in certain areas," Fitch stated in a report.

According to Credit Suisse, Vivo will receive 43MHz of spectrum (47% of Oi's total), giving it 185MHz, putting it just ahead of Claro, which will not receive any because its acquisition of Nextel significantly increased its spectrum assets, putting it close to the applicable limits.

“The overall structure of the [Oi] deal and the division of assets should promote a win-win-win-win situation for all of the involved players. Vivo should recover its position as the leader in terms of overall spectrum holdings. TIM should reduce significantly the spectrum gap versus its competitors, in addition to receiving a relevant amount of mobile subs. Claro should increase its mobile market share, as it will receive a good amount of subscribers,” reads the Credit Suisse report.

The bank also said that TIM remains its "preferred stock to play the consolidation story" and that it does not expect significant antitrust remedies from Cade

Ari Lopes, principal Latin America analyst at Omdia, meanwhile, told BNamericas that he expects Cade to introduce significant important caveats.


After completing the sale of all the its assets it wants to divest, Oi expects to become a supplier of fiber optic infrastructure, operating mainly in the wholesale sector.

The company plans to have a minority stake in a future fiber vehicle provisionally called InfraCo.

This week, Oi CEO Rodrigo Abreu said that the company could open up the capital of InfraCo to investors in the future, according to a report in daily Valor Econômico.

Abreu admitted that an IPO is one of the possibilities, but added that no deadlines or pre-established conditions have yet been established, according to the paper. 

The move would have to be agreed with the company's future partner in the fiber vehicle.

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