Telemar Closes BT Buy

Telemar Norte Leste has closed the purchase of 61% of Brasil Telecom for BRL5.37bn, marking the end of a long regulatory process after the deal was agreed in April. The amount includes BRL5.86bn it agreed to pay, plus adjustments for interest and the assumption of BRL998m in debt from BT parent Invitel. Telemar, which operates under the Oi brand, bought BRL81m voting shares for BRL77.04 per unit including debt assumption, and must now make a tag-along offer to minority shareholders. It now has a stronger platform for competing with foreign fixed-line and wireless players in Brazil’s market such as TIM, Telefonica, and America Movil, and it says it plans to invest BRL30bn to double the number of subscribers and make acquisitions abroad. The companies received preliminary approval from Brazil’s telecommunications regulator last month. Fitch lowered BT’s debt rating to BBB minus from BBB to match that of Telemar and account for expected increased indebtedness. Telemar has used BRL5.6bn in promissory notes and BRL4.3bn in bank loans to fund the purchase.