TIM expected to dismantle Oi’s antennas after failing to find buyers

Brazilian telco TIM failed to find buyers for mobile base stations (MBS’s, including antennas and related equipment attached to towers) it inherited from Oi.

The company is now expected to decommission and dismantle most of the structures.

Offering 50% of Oi’s stations to the market was one of the measures imposed by antitrust regulator Cade to approve the acquisition of Oi’s mobile business by TIM, Claro and Telefônica Brasil.

TIM's offer was launched last July, for an initial period of six months, as determined by Cade. The telco, however, did not find buyers for the antennas. 

The company then opened a second period, for two months, starting in January this year, and offered a 75% haircut on the price of the sites. The extension was provided for in Cade’s conditions. 

Yet again, the company and Bradesco BBI, the bank it hired as advisor for the process, did not find buyers for the equipment.

In November, TIM's CTO Leonardo Capdeville said in a conference call, without providing further details, that the company did receive interest from one potential buyer of the antennas. Those talks, however, came to nothing.

“We've had one interested in the sites so far. Not in the network asset, but in the equipment itself. It's a second-hand equipment [company]. We’re in contractual talks to see if we can move towards negotiations,” Capdeville said at the time. 

This week, law firm Veirano Advogados formally requested Cade, on behalf of TIM, to consider that the company's obligation to make the sites available to the market be fulfilled and the operator be released from any liability regarding the structures.

“TIM clarifies, therefore, that the term of the public offer in question has ended, without the acquisition of MBS’s by any interested party. It should be noted that wide publicity was given to the offers, including TIM, through Bradesco BBI actively seeking out potential stakeholders (as already reported to Cade),” said Veirano in an email sent to the watchdog.

TIM received 7,200 sites from Oi. Due to overlaps and outdated technology, the company is expected to retain only around 2,500 of those. BNamericas has found that Claro and Telefônica Brasil are equally struggling to find buyers for their share of Oi's sites.

TIM was selling 3,514 2G antennas, 2,649 3G antennas, 1,712 4G antennas and even 185 5G-compatible ones. 

According to TIM’s documents, the stations were being offered for 26,000 reais (US$5,000) each for 2G ones and up to 322,000 reais in the case of multi-band antennas that can transmit 2G, 3G, 4G and 5G signals.

Most of the antennas were manufactured by Huawei, but there are also units made by Nokia and Ericsson.

The decommissioning of the equipment will likely impact the revenues of tower companies, such as American Tower and SBA. These companies lease space on their towers to operators to keep antennas attached to them.

Oi represents revenues of about US$100mn for American Tower, and most of the contracts with the telco are long term.

“It [Oi] represents about 1% of our overall business. About one third of that is tied-in with their landline business, and we fully expect that the landline business of Oi will keep those sites over time. The other two thirds, we have, on average, five to six years remaining on the length there. Oi is not a significant impact today, but that may start unfolding this year and into next as we negotiate with the three players who kind of carved up Oi,” American Tower’s CFO Rod Smith told investors last month.