Telefonica Says It's 'Only Possibly Buyer' of AT&T's SkyBy and
If AT&T seeks buyers for Sky Brasil, `it's got to be us'
Nextel could also be M&A target, though Tim's not interested
If AT&T Inc. decides to sell its satellite-TV business Sky Brasil Servicos, it may have only one buyer: Telefonica Brasil SA.
Sky Brasil, which AT&T Inc. bought in July as part of its purchase of DirecTV, serves six million subscribers in the country that “could be complementary" to Telefonica Brasil’s existing client base, said Telefonica Brasil Chief Executive Officer Amos Genish. The company would be the “the only possible buyer” of Sky Brasil, added Alberto Horcajo Aguirre, Telefonica Brasil’s chief financial officer. Both executives spoke in an interview on Tuesday at Bloomberg’s New York headquarters.
Net, controlled by Mexico’s America Movil SAB, is the No. 1 pay-TV provider in the country, followed by Sky, Telefonica and Oi SA, which has too big a market share to buy Sky.
“After us, it’s only Oi, which doesn’t have the fire power and a small base, so it’s got to be us, because no other deal is possible," said Aguirre.
Consolidation is all but inevitable among Brazilian carriers, which are facing margin pressure from rivals and high capital expenditures. Mergers and acquisitions could be accelerated in the current economic climate, with a return to growth elusive and battles among politicians barring any progress in shoring up fiscal accounts.
“We are looking to take advantage of the assets we just got and focus where we can on improving operations,” AT&T Chief Financial Officer John Stephens said in an interview Wednesday. “Over and above that, I have no comment on any possible deals. As we have said, there are some markets, like Mexico, that are real opportunities where we see an underserved market that is growing faster than the U.S."
Telefonica Brazil is probably right that they are the leading contender for Sky Brasil, if AT&T decides to sell it, said Walt Piecyk, an analyst at BTIG LLC in New York.
Tim Not Interested
A combination between Sky Brasil and Tim Participacoes SA, the second-largest mobile carrier in Brazil with a growing fixed broadband business, “doesn’t seem to make strategic sense,” said Tim CEO Rodrigo Abreu, in a separate interview Tuesday at Bloomberg’s New York headquarters.
“We’re not aggressively pursuing consolidation as a strategy,” he said. “Obviously, if the conditions for consolidation continue to exist, if the movements end up being developed, we’re going to be ready to react."
For Tim, another possible target for consolidation is Nextel Telecomunicacoes Ltda., owned by NII Holdings Inc., which emerged from bankruptcy this year. The company has been aggressive in marketing, despite losing money, said Abreu.
“They’re spending way more than what they could in theory given the modeling of the company in an expectation obviously to boost the subscriber share so they could become more attractive," Abreu said. Yet any new customers could easily switch after promotions expire, and there’s no guarantee a buyer would be able to retain Nextel’s wireless frequencies, making an acquisition of the company “a tough case," he said.
Nextel declined to comment on the possibility of a deal. In an e-mail, the company said it’s confident in its future growth as evidenced by recent market share gains and is prepared to reach planned expectations.
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