Telecom Italia to acquire AES Atimus for €70 mn to strengthen Brazilian operations

Tim Participações, the Brazilian mobile unit of Telecom Italia SpA, yesterday agreed to buy Brazilian fibre-optic grid company AES Atimus, for €700 million ($1 billion) in cash to strengthen its network capacity in San Paolo and Rio de Janeiro.

Tim Participações won the bid over rival offers from Oi, the second biggest in Latin American landline operator behind Mexico's América Móvil, mobile operators, Algar Telecom, GVT, TIM/Intelig and Telefonica.

AES Atimus, a unit of US power company AES Corp, operates a fibre-optic network of more than 5,500kms servicing 21 cities in Sao Paulo and Rio de Janeiro. Currently, 15,000 homes are covered by AES Atimus's fibre network.

AES Atimus reported revenues in 2010 of 211 million reais with an EBITDA margin of 63 per cent, said Telecom Italia.

The proposed acquisition will strengthen Tim Participações mobile network between transmission stations, allowing it to extend and accelerate mobile broadband services in the most densely populated and wealthiest regions of the country which generate 27 per cent of national GDP.

Tim Participações, the third-largest telecoms operator in Brazil, will also benefit from synergies worth 1 billion reais over three years through AES Atimus' access infrastructure, avoiding the need to rent connections from third party operators.

AES Atimus' fibre infrastructure will integrate perfectly with that of Intelig (essentially backbone based), acquired in 2009, facilitating the rapid growth of the company's offering and selectively exploit many of the opportunities that will arise from convergence in the Brazilian market.

Telecom Italia, the country's largest telecoms operator said that the acquisition will not have any impact on its deleveraging plans, aimed at cutting the group's adjusted net debt from €30.6 billion to about €25 billion by 2013.