The telephone operator Oi is definitely starting to say goodbye to its customers. The Administrative Council for Economic Defense (Cade) approved on Wednesday (9), with reservations, the sale of the company’s mobile network to a kind of consortium formed by Claro, Tim and Vivo. The bases endorsed by the free competition control body were not what Oi wanted. Nor were they the way the buyers would have liked. The result, however, solves part of Oi’s chronic financial problem and puts the trio of companies with their hands on 98.1% of the mobile internet market in Brazil, which has 253.3 million accesses, according to December data from Anatel (National Telecommunications Agency). In 2005, there were 67.4 million hits in the country. There was a vertiginous growth until 2015, when it reached the peak of 284.1 million hits, but it continued to decline until 2020, when consumers began to resume. These are precisely the three that won most of the frequencies in the 5G auction in November.
Oi’s mobile network has 42 million customers, representing a 16.6% market share in the sector. They will migrate to the three companies. They won this line of business in an auction held in 2020, for R$ 16.5 billion. Anatel had approved the negotiation at the end of January this year, also with conditions. This move is part of Oi’s judicial recovery process, opened in 2016, the largest in Brazil’s history, after reaching a debt of R$65 billion. The current pending is around R$ 29.9 billion, according to the latest balance sheet released by the company, with figures from September last year. Oi, created in 1998 to be one of the giants in the sector – but never really took off – depends on the entry of these resources from the sale of its mobile network to survive. And to continue focused on its other line of business, offering fiber optics, through the company V.tal, which has BTG Pactual as a partner.
DIVISION The approval of Cade was decided by the president of the entity, Alexandre Cordeiro, who broke the tie with a vote of minerva. Three advisors were against the sale, as it affected competition, since practically the entire market will be left with just three players, which would compromise the incentive to compete on price – a potential loss to the consumer. Another three voted in favor of the operation, as most of Oi’s assets will be distributed to Tim, currently the third in share (20.5% of the market), and this was understood as a potential to expand the dispute for consumers. The recently announced CEO of Tim Brasil, Alberto Griselli, celebrated the result of Cade’s analysis. “The approval decision preserves the interest of the business and society, ensuring the maintenance of the competition ecosystem and necessary investments for the development of Brazilian telecommunications and the country’s digital advancement”, he said in a note.
Fernando Moulin, partner at Sponsorb, professor and specialist in business, digital transformation and customer experience, also believes that Cade’s decision was the most appropriate. He says that millions of people and thousands of companies, including government entities, depend on Oi’s current infrastructure to gain access to the digital world. With the financial gravity of the company, there is a real risk of bankruptcy. “It’s better to have three big companies competing with each other, with smaller companies, than having one that will stop providing customer service.”
To minimize the impact of a possible merger, CADE imposed some “remedies”, such as the obligation for the three operators to lease part of the spectrum to other operators and to offer to sell base stations. These conditions must be implemented before the purchase of Oi’s mobile network. As a result, the operation may take a little longer to complete. The companies wanted this to occur after the deal was completed. The trio that won Oi’s mobile network is capitalized and committed to making billion-dollar investments in return for exploring 5G bands. “In the current market configuration, Oi did not have these conditions,” said specialist Moulin.
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