América Móvil wants telecom consolidation in Brazil

With four major players, the Brazilian telecoms market needs to consolidate, as it has too many companies with overlapping operations, said the CEO of the América Móvil group in Brazil, José Felix.

Telefónica's Vivo, América Móvil Brasil (Claro group), Telecom Italia's TIMand Brazil's Oi are the dominant telecom companies in the country.

"Brazil needs to consolidate. And it will occur. In fact, it is already happening. There are too many companies with overlapping business competing in a gigantic country like this," Felix told reporters at the Futurecom.

The problem with Brazil's market is not a lack of competition but the lack of universalization of telecom services, he said, adding that the ideal competitive landscape would include up to three companies in urban centers. Otherwise, there is no way to serve rural areas and municipalities with zero commercial appeal, where it would be up to the government to install the infrastructure.

Questioned by BNamericas if América Móvil had interest in acquiring part bankruptcy-struggling Oi or if it would wait for the company to emerge from its judicial protection, Felix said:

"We watch these movements as any other company. But today there's no single interest in Oi, especially because, as Marco [Schroeder, Oi's CEO] well said, first the company needs to solve its problems, settle its debt. That's our position. Today there's nothing, absolutely nothing."

On Tuesday, TIM CEO Stefano di Angelis also said that any M&A move involving Oi would only be possible after the telco exits bankruptcy protection.

In Felix's opinion, in addition to having too many telecom companies, Brazil harbors players that do not share their infrastructure as they should.

"We share a lot of stuff, fiber, tower, lots of stuff. However, we could share much more, such as the maintenance of towers and networks. I proposed it to my peers, but they declined fearing backlashes from the antitrust watchdog Cade."

FINES-FOR-INVESTMENTS

Felix also praised the approval of federal audit court TCU for telecom regulator Anatel to close fines-for-investments deals with operators.

The court's decision referred to the so-called conduct adjustment term, or TAC in Portuguese, signed with Vivo, but sets a precedent that can affect the wider market. Oi also has its own TAC with Anatel pending, and Claro may be next in line.

"Now that the TACs were cleared, it's time to open our drawers and review what we have there. I don't have the exact numbers, but it is something around 250mn reais [US$79.3mn in unpaid fines]."