V.tal to snap up Oi’s fiber broadband base with US$1bn bid

Brazilian neutral network and digital infra company V.tal is on track to take over Oi’s fiber broadband base, ClientCo, after making the sole bid for the telco’s unit.

V.tal is controlled by funds linked to local investment bank BTG Pactual and was the only bidder authorized to participate in the second round of the auction on Wednesday.

Oi notified the market that V.tal offered 5.6 billion reais (US$1.03bn), of which 4.99bn would be paid in shares. Oi holds a 17% stake in V.tal.

In the first round, internet service provider Ligga Telecomunicações was the sole bidder. The offer of 1.03bn reais (US$188 million) – more than 86% below the reference price of 7.3bn reais – was rejected by Oi’s creditors.

Under the terms of Oi’s ongoing judicial reorganization 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.

Ligga submitted a past-deadline request to bid in the second round. Initially, the court responsible for Oi’s case allowed the company to participate. However, minutes before the process began Wednesday and following a legal objection filed by V.tal, Ligga was excluded.

Oi’s fiber customer base is the second largest in the country, comprising nearly 4.5mn accesses as of end-July, or 11.6% of Brazil’s total.

ANALYSIS

Made up of fiber backbones and backhauls, Oi’s fiber network (InfraCo) was sold during the operator’s first judicial reorganization process three years ago.

It was that sale in 2021 to the BTG funds that led to the creation of V.tal, launched to become a neutral, wholesale platform for the leasing of fiber to internet service providers and other operators.

The BTG funds bought 57.9% of InfraCo for 12.9bn reais.

By absorbing Oi's fiber client base – the retail part of the fiber business – V.tal moves away from its original wholesale proposition.

In theory, this movement could jeopardize the company's ability to be seen as wholesale-agnostic, with some operators already reluctant to enter into fiber lease agreements with V.tal knowing that Oi is a partner in the company. 

Market sources told BNamericas in recent months – when it was clear that V.tal was moving towards acquiring Oi's fiber customers – that the move would mean the firm's end as a neutral wholesale company.