What to expect for Brazil’s telecom sector if Oi sells its mobile operations?

Earlier this week, telecom giants Vivo and TIM announced they are interested in acquiring mobile operations belonging to Oi, the country’s fourth-largest telecom operator. For cash-strapped Oi, selling assets is a silver lining; but it may have deep implications for the sector as a whole in Brazil.

Oi Telecom is still grappling with the aftermath of its BRL 65 billion court-supervised reorganization process—only recently overtaken by conglomerate Odebrecht as Brazil’s biggest ever. As of 2019, Oi announced a plan to fully revamp its operations and financial structure, aiming to shift its focus on Fiber-to-the-Home (FTTH) internet and raising BRL 7.5 billion by selling assets.

While the company almost ran out of cash in recent months, it managed to secure BRL 2.5 billion by selling bonds and sold its stake in Angola’s Unitel for USD 1 billion. It also has other non-core assets in the divestment pipeline, such as cell phone towers, data centers and fiber networks in São Paulo. According to BTG Pactual bank, this could generate between BRL 2 billion and BRL 2.5 billion in revenues.

But the cherry on top of the cake is Vivo and TIM interest in Oi’s mobile operations. Both companies informed they have...