Chinese rivals in bids to rescue Brazil’s bankrupt Oi

By:
Alan Burkitt-Gray
Published on:

China Mobile joins China Telecom with rival bid to rescue Brazil’s Oi from $19bn bankruptcy

China Mobile is set to compete with its rival, China Telecom, in a bid to invest in the bankrupt Brazilian operator Oi.

The move comes just a week before Oi’s creditors meet to discuss potential rescue bids, and just a day after the regulator, Anatel, condemned existing proposals as having “ruinous potential to the interests of the company” and the community at large.

Anatel threatened Oi’s directors and executive officers with sanctions if they sign “any contract” to support the existing judicial recovery plan “or similar document”.

The president of Anatel, Juarez Quadros, revealed China Mobile’s approach yesterday at a press conference about the move from analogue to digital TV in São Paulo.

He did not give any further details about China Mobile’s interest, which follows reports at the beginning of November that China Telecom was willing to invest $6 billion in Oi if the company settled with creditors.

Oi has debts of $19 billion, mainly owed to banks but also to the regulator itself, after a failed project to create a Portuguese-speaking telecoms group covering Angola and Portugal as well as Brazil.

Representatives of China Telecom and US-based private equity company TPG Capital have met Brazil’s solicitor general to discuss a takeover of Oi. TPG is the company that earlier this year bought the former Wharf T&T in Hong Kong and was said to be discussing the purchase of Reliance Communications’ towers in India.

The future of Oi seems as confused as when the company went into bankruptcy protection more than a year ago. Last Friday CEO Marco Schroeder resigned after a disagreement with the company’s board, to be replaced by chief legal officer Eurico de Jesus Teles Neto.

He now combines both roles, but the board said it was looking for a permanent replacement for the CEO position.

Ahead of the creditors’ meeting scheduled for Thursday 7 December, the company this week said it wanted a capital increase of $2.2 billion to $3.4 billion. Local media say that creditors who opt to participate through debt conversion will contribute between $1 billion and $1.7 billion in cash.