Brazil gives preliminary green light to sale of Oi’s mobile operations

The general superintendence of Brazilian antitrust watchdog Cade has recommended the approval, with caveats, of the sale of Oi's mobile operations to Telefônica Brasil, Claro and TIM for 16.5bn reais (US$2.94bn).

However, Cade's recommendation is not final. The sale still remains to be approved by thebody's full board, which may or may not accept the recommendation of the general superintendence. 

There is currently no firm date for that to take place, but Telefônica and TIM said they expect it to be by the end of the year.

The conditions suggested for the deal to be approved include mandatory frequency-sharing agreements and the lease of Oi's spectrum acquired by the trio in cities with fewer than 100,000 inhabitants.

The three telcos are also expected to grant access to Oi's mobile network through roaming agreements with other players, the agency said in a 212-page report.

The logic behind these requirements is to foster competition in the wholesale market, while also allowing the possibility of a new entrant in the neutral wholesale segment.

Cade's superintendence, however, saw no need to modify the distribution of Oi's customers, antennas and spectrum as proposed by the trio of buyers, nor to demand other divestments by the companies.

Six parties called to be allowed to express their views to Cade on the Oi sale: operators associations TelComp and NEOTV, Brazilian consumer protection institute IDEC, regional operators Algar Telecom and Sercomtel, and MVNO enabler Surf Telecom.

In general, these companies have expressed concerns about the impacts on the competitive environment arising from the sale, pointing to factors such as higher market concentration, increased barriers to new entrants and higher costs for accessing the radio frequency spectrum.

They also claim that RAN-sharing agreements fail to provide effective network access to third parties and claim there are risks of operational and competitive coordination between the buyers, in addition to increases in prices to end-customers.

These parties also claim that such a consolidation undermines regulator Anatel's attempts to promote a more competitive environment through spectrum auctions, including the 5G tender.

The sale of Oi Mobile to the three telcos was announced last December and an agreement was signed in April. 

In addition to Cade, conclusion is still pending approval from Anatel.