Will Brazilian neutral network and digital infrastructure company V.tal take over financially troubled operator Oi Brasil’s fibre broadband base, ClientCo? Having last week made the sole bid for Oi’s fibre unit it’s looking very likely that it will.
V.tal is controlled by funds linked to local investment bank BTG Pactual (which was recently in the news thanks to a major carbon offset deal) and was the only bidder authorised to participate in the second round of the ClientCo auction that took place last Wednesday.
V.tal offered BRL5.6 billion (US$1.03 billion), of which BRL4.99 billion would be paid in shares. Oi holds a 17% stake in V.tal.
As we reported at the time, in the first round internet service provider Ligga Telecomunicações was the sole bidder. The Ligga offer was about US$188 million, way below the reference price (the recent V.tal bid was over five times as much) and was rejected by Oi’s creditors.
Under the terms of Oi’s ongoing judicial reorganisation process, V.tal/BTG committed to bid in a second round if there were no other interested parties. The company would also have the right to match any proposals that might have been presented in round two. That didn’t happen.
Ligga submitted a request to bid in the second round, but after the deadline. However, the request was at first permitted but then, following a legal objection filed by V.tal, refused, meaning Ligga was excluded.
The BNamericas news website says that Oi’s fibre customer base is the second largest in the country – close to 4.5 million accesses by the end of July, or 11.6% of Brazil’s total.
However, as the same source points out, some operators are already reluctant to enter into fibre lease agreements with V.tal, knowing that Oi is a partner in the company. The feeling seems to be is that by absorbing Oi's fibre client base – the retail part of the fibre business – V.tal moves away from its original wholesale proposition.
Thus, if, as seems to be expected, V.tal acquires Oi's fibre customers, this could signal an end to the firm's role as a neutral wholesale company.
