Fund snaps up one of Brazil’s last public telcos

Privatization of Sercomtel, considered one of the last public Brazilian telcos, has been completed.

Brazil’s Bordeaux investment fund has snapped up the company in an auction on the São Paulo B3 stock exchange for nearly 134mn reais (US$24.1mn),  900% above the minimum established price.

Bordeaux, which is controlled by São Paulo-based broker firm Planner, was the sole bidder in the auction. It offered 0.1 reais per share for the 38mn shares and included an investment commitment of 130mn reais.

A sales attempt in February failed because no bidders showed up.

Sercomtel's woes are widely known. 

In 2017, regulator Anatel initiated the revocation of Sercomtel's telephony concession due to the results accumulated between 2009 and 2016. The regulator also said the company needed more resources.

An audit commissioned to Ernst & Young showed that the accumulated liabilities amounted to 600mn reais.

Sercomtel is owned by the city of Londrina (55%), in Paraná state, and Paraná’s energy utility Copel (45%).

According to Londrina, Bordeaux will pay 50mn reais immediately while 80mn reais will be invested during up to 18 months, based on the company's needs.

In addition to mobile and fixed telephony, Sercomtel also provides broadband services. It has operations in 198 localities in Paraná, 15 of which it serves with its own infrastructure and 183 in partnership with Copel.

Overall, the cellular and fixed telephony and the internet operations were sold, while Londrina will retain control of Sercomtel's public lighting service and the call center operation.

By December 2019, the carrier had 54,000 mobile clients (0.02% of Brazil’s mobile market), 235,000 fixed telephony accesses and 276,000 fixed broadband ones.

Sercomtel ended the year with a net loss of about 22mn reais, reversing a 2018 profit of 3mn reais. The result was mainly driven by a drop in net revenue of 15%, to 160mn reais.

Antitrust watchdog Cade and Anatel still need to approve Sercomtel's sale.

COPEL

Next in line for privatization is Copel Telecom, the telecom arm of Copel, which owns a 34,000km fiber backbone in Paraná connecting all 399 municipalities in the state, according to the company.

In a public hearing on B3 on Wednesday, Copel Telecom's head, Wendell Oliveira, said that the auction is scheduled to take place in the last quarter this year and the transfer of shares in the first quarter of 2021.

Copel approved the privatization in July, as the power group aims to focus solely on the energy distribution business. A public announcement for the sale is expected for the coming weeks.

Copel Telecom provides fixed broadband services through its fiber network to over 188,000 corporate and residential clients in Paraná.

The company reported 120mn reais in net losses last year, versus a profit of 24mn reais the year before. 

The telco planned investments of nearly 124mn reais this year, down from 146mn reais in 2019.