Telecom Italia and AT&T both mull LatAm acquisitions

Telecom Italia is said to be weighing up the possibility of buying Brazilian telco Oi in a bid to strengthen its local arm TIM Brazil) position in the South American market, where it looks likely to get squeezed if Telefónica’s purchase of GVT goes through as planned.

The news follows speculation of the carrier being made into an acquisition target after it lost out on the GVT take-over to Telefonica earlier this month.

Telecom Italia, however, doesn’t seem to be giving up just so easily, and according to unnamed sources close to the matter, as reported by Bloomberg, the company has held talks on the possibility of buying Oi, which has in turn been in discussions earlier this month with América Móvil about a possible joint-bid for TIM.

The acquisition of Oi would help Telecom Italia’s position in Brazil enormously but the company needs to first find out the feasibility of the plan in regulatory terms as Oi’s mobile business is in direct competition with TIM Participações. Another consideration for the Italian operator is the $20 billion debt that Oi would come with.

Meanwhile, AT&T has signalled it is open to acquisitions in Mexico, where following the government’s recent toughening up of industry regulations, América Móvil, which has over 50% of the country’s market share, has stated plans to sell some of its assets in a bid to avoid any trouble from competition watchdogs.

AT&T, currently closing its acquisition of US satellite broadcast company DIRECTV for reported $49 billion, refused to confirm any concrete plans but is clearly keeping its eyes firmly on the Mexican market. “It’s quite admirable what the political system has generated in Mexico in terms of reform over the last couple of months,” said John Stankey, AT&T Group President and Chief Strategy Officer, at a BAML conference. “…if we weren’t looking at Mexico and Latin America more broadly [and] what opportunities there were to further shareholder returns down there and begin to diversify our revenue sources, I think we would be asleep at the wheel and we’re not historically known to do that.”

The time for AT&T to make a move in Mexico certainly looks near, as perhaps not by a total coincidence it sold its 8% stake in América Móvil in June, cutting ties with the telco giant and its majority owner Carlos Slim. Until the recent government action in Mexico pickings in the market have been slim.