PARIS/SAO PAULO, Nov 30 (Reuters) - Telecoms group Altice SA has agreed to buy the Portuguese operations of Brazil’s Grupo Oi for about 7.4 billion euro ($9.2 billion), two sources close to the deal said on Sunday.
Altice beat out a rival bid from private equity funds Apax and Bain, and will now add another country to its portfolio of cable and mobile companies in France, Israel, and the Dominican Republic among others.
Controlled by Franco-Israeli billionaire entrepreneur Patrick Drahi, Altice is fresh from completing its biggest acquisition last Thursday via subsidiary French cable company Numericable ’s buy of mobile operator SFR.
One of the sources said the announcement expected shortly will be that Oi and Altice will enter three weeks of exclusive talks and due diligence towards finalising the accord.
The deal with Oi marks the effective unwinding of Oi’s ill-fated merger with Portugal Telecom, which hit the rocks earlier this year when the Portuguese side lost hundreds of millions of euros in the country’s Espirito Santo banking scandal.
Altice already owns two small cable companies in Portugal and buying the former state-owned monopoly Portugal Telecom would vault it into prime position to compete with Vodafone and Optimus.
Altice said on Nov. 3 it had bid for the PT assets, valuing them at an enterprise value of 7.025 billion euros on a cash and debt-free basis. The original bid included a 400 million euros earn-out related to the future revenue generation of Portugal Telecom and a 400 million euros earn-out related to future operating free cash flow.
The sale of Oi’s Portuguese assets could propel the Brazilian company’s effort to team up with rivals in its home turf to buy and then break up TIM Participacoes SA, the nation’s No 2 wireless carrier.
A source with direct knowledge of the situation told Reuters last month that Oi, Telefonica and America Movil will place a bid worth 32 billion reais for TIM, which is 67 percent controlled by Telecom Italia, and then seek to split it among them.
The bid could be presented within days after the Portugal Telecom deal is confirmed, analysts and bankers said.
Oi needs to dispose of some assets to lower its debt burden, currently at about 46 billion reais, and gain financial muscle to participate in the TIM bid.
$1 = 0.8019 euros Editing by Andrew Callus