BMI View: Reports suggesting that AT&T may be looking to deepen its presence in Brazil would have positive connotations for the country's telecoms industry. While we see its move into fixed-wireless broadband as certain, O i stands out as the most likely acquisition target.
Senior executives and key managers from US telecoms company AT&T are visiting Brazil in the week of 14 June 2015, to meet with Brazilian President Dilma Rousseff and Telecommunications Minister Ricardo Berzoini. It is not clear what the agenda for the discussions are but it is likely to include the pending merger between AT&T and DirecTV, which controls Sky in Brazil. Speculation from sources such as Teletime, have suggested that AT&T may be interested in the remaining 2.5GHz spectrum, some of which was sold in June 2012 but the majority of the frequencies is due to be auctioned in November/December 2015. There are also rumours that AT&T is interested in the outstanding 700MHz spectrum that was unsold in September 2014 and that the company may be interested in the purchase of a Brazilian operator.
The AT&T-DirecTV merger is still pending authorisation in the US from the FCC, but BMI believes that it will be approved ( see 'Comcast/TWC Failure Will Not Impact AT&T/DirecTV Deal', April 27 2015). DirecTV holds a 93% stake in Sky Brasil, the second largest pay-TV operator in the country with 5.68mn subscribers and a 28.8% market share as of Q115, behind only Net Servi c os- Embratel. This gives AT&T a strong presence in Brazil, one of the most attractive markets in Latin America and it is unsurprising that the company may be looking to ramp up its investment into other segments. 3G subscriptions overtook 2G in recent months and 4G is beginning to make an impact on the market. With AT&T's experience with 4G technology in the US, it would be a welcome addition to the Brazilian mobile broadband market.
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