TIM expects its purchase of part of Oi‘s mobile operations in Brazil to create up to BRL 19 billion ($4 billion) of value for the enlarged company, the Brazilian telecoms firm said late on Sunday.
TIM, which is controlled by Italy’s Telecom Italia SA, said the net present value (NPV) forecast took into account commercial and infrastructure synergies. The lower end of the estimate was BRL 16 billion.
According to the company, 45% of the synergies should be captured by 2030.
Shares in the company were up 2.6% at BRL 13.90 on Monday morning, making it the top performer on Brazil‘s Bovespa stock index, which fell 1.1%.
TIM agreed to buy Oi’s mobile operations in an auction in late 2020, when it made a joint bid of BRL 16.5 billion with rivals Telefonica Brasil SA and Claro, a subsidiary of Mexico‘s America Movil SAB de CV.
The deal closed last week after major regulatory scrutiny, with TIM’s national market share now seen reaching 27%, from 20% at the end of last year.
TIM said in a presentation the deal was set to boost net revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) by BRL 1.8 billion and BRL 1.1 billion, respectively, for the remaining eight months of 2022.
“The acquisition is a game-changer for TIM … The acquired spectrum and network will reduce future capex (capital expenditure) needs and boost cash flow generation,” the company added, noting its capex-to-revenue ratio was expected to reach a mid-teens percentage by 2030 from about 20% currently.
Analysts at Guide Investimentos viewed the announcement as positive, saying that synergies between TIM and its new assets are relevant and might be enlarged as the company increases the sale of products it already offers to its customers.