Carlos Slim’s America Movil mulls merging its Brazilian units

america-movil-logotipoThree Brazilian companies controlled by magnate Carlos Slim’s America Movil – telephone company Embratel, mobile carrier Claro, and subscription television and internet access firm NET – have announced the launch of studies for a potential merger of their operations.

The three companies released statements announcing they are “considering the possibility of implementing a restructuring [plan] to consolidate our assets and businesses, as well as those of our subsidiaries, into a single company”.

The companies plan to begin doing internal studies and making the necessary arrangements with National Telecommunications Agency (Anatel) to “verify the feasibility” of the merger and the conditions the regulatory body would impose to approve the transaction.

According to the companies controlled by America Movil in Brazil, the final decision will depend, among other things, “on the satisfactory conclusion of the studies and analysis to be conducted” as well as the conditions set by telecoms regulator Anatel.

The process was initiated last year, after Embratel took over control of Net. Embratel is a fixed telephony carrier and satellite television operator, as well as controlling company of satellite operator Star One.

The merger would create a giant telecommunications leader in subscription television and broadband internet access services in Brazil (Net), and make it the second-largest mobile operator in the market (Claro).

The process of merging the three companies would be similar to that carried out by Spanish group Telefonica, which consolidated its business units’ shares and operations in Spain into a single group.

Telefonica Brazil was created in the first half of 2011 after the Spanish group acquired control of mobile phone operator Vivo, which it previously shared with Portugal Telecom, and combined Vivo’s shares with those of fixed telephony operator Telesp.

That merger also included Internet access company Speedy and Telefonica’s stake in TVA, the third largest subscription television operator in Brazil. The consolidation of industry companies in Brazil has been expected since 2011, when a new law was passed that allows telecommunications companies to offer subscription television services.

This legislation further strengthened the groups that are fighting for control of the Brazilian telecommunications market, which also include Brazilian group Oi. A leader in the fixed telephony market, Oi partnered with Portugal Telecom two years ago and also offers mobile telephony, Internet access and subscription television services.

Translated by Candice Carmel