Brazil telecom TIM sees synergies from Oi deal at up to $3.96 bln

TIM SA expects its purchase of part of Oi SA’s mobile operations in Brazil to create up to 19 billion reais ($4 billion) of value for the enlarged company, the Brazilian telecoms firm said late Sunday.

TIM, which is controlled by Italy’s Telecom Italia SpA, said the net present value (NPV) forecast took into account commercial and infrastructure synergies. The lower end of the estimate was 16 billion reais.

According to the company, 45 per cent of the synergies should be captured by 2030.

TIM agreed to buy Oi’s mobile operations in an auction in late 2020, when it made a joint bid of 16.5 billion reais with rivals Telefonica Brasil SA and Claro, a subsidiary of Mexico’s America Movil SAB de CV.

The deal closed last week after major regulatory scrutiny, with TIM’s national market share now seen reaching 27 per cent, from 20 per cent at the end of last year.

TIM said in a presentation the deal was set to boost net revenues and earnings before interest, taxes, depreciation and amortization (EBITDA) by 1.8 billion and 1.1 billion reais, respectively, for the remaining eight months of 2022.

“The acquisition is a game changer for TIM… The acquired spectrum and network will reduce future capex (capital expenditure) needs and boost cash flow generation,” the company added, noting its capex-to-revenue ratio was expected to reach a mid-teens percentage by 2030 from about 20 per cent currently. CNA