When Oi's creditors meet in a general assembly on September 8, they will not only have to make a decision on the future of the company, but they can also kick off a deep remodeling of the Brazilian telecommunications market, which will mark its development for the next few years.

With just over 50 million accesses (36.6 million in mobile telephony, 9.6 million in fixed telephony, 5 million in fixed broadband and 1.48 million in pay TV), Oi is the fourth national operator of one of the largest telecommunications markets of the world and of Latin America.

However, a series of bad business decisions, among other issues, led the company to currently being under a Judicial Recovery Plan. Within this framework, a few months ago its board of directors presented a plan that basically consists of divesting of its main businesses, although with the intention of retaining most of its clients to transform itself into a telecommunications company without own networks, as indicated by the “ gurus ”of the sector a decade ago, when they envisioned for the future a market where operators only had customers and rented the infrastructure to other companies.

In the case of Oi, the intention is to sell the entire mobile telephony business, most of the infrastructure business and recently the Pay TV business was added, whereby, in the end, there would be a company that would have half of its current turnover and a debt (US$4.472.3 billion) also equivalent to a half, but with a much lower need for investments, which will allow a notable improvement in profitability with EBITDA margins of 40% or 50%.

So far the operation is progressing steadily. Regarding mobile telephony, it is considering a new offer presented by the consortium made up of Claro, TIM and Vivo, for US$3.075 billion, which exceeds the minimum set of US$2.900 billion. In the infrastructure business (called InfraCo) there are more than ten candidates fighting to take over 51% of the shares (49% remains in the hands of Oi) where a minimum value of US$1.239 billion was set and the obligation to make investments for US$953 million. It must be taken into account that Oi has the largest fiber optic network in the country, with 388,000 kilometers of extension and 43,000 kilometers of pipelines.

However, in the telecommunications sector there are regulatory doubts as to whether the three large operators may finally take over Oi's mobile business, since in addition to the market concentration that this would produce, there is the issue related to the use of the existing limits and spectrum.

At present, Oi has an average of 92 MHz of spectrum in total in the cities where it operates, against 117 MHz of TIM, 155 MHz of Vivo and 177 MHz of Claro, resulting from its consolidation with Nextel. Due to this, distribution of Oi spectrum carried out by the three operators must keep a correlation with the limits imposed by the Agencia Nacional de Telecomunicaciones (Telecom regulator) for each numbering area. In addition, the fact of the unequal amount of spectrum that Oi has in the different frequency bands should be added. For example, in the 2.5 GHz band, Oi has an average of 20 MHz, the same amount as TIM, since they were the ones that acquired the smallest lots in the tender held in 2012. In addition, the fact of the unequal amount of spectrum that Oi has in the different frequency bands should be added. For example, in the 2.5 GHz band, Oi has an average of 20 MHz, the same amount as TIM, since they were the ones that acquired the smallest lots in the tender carried out in 2012.

Spectrum sharing agreements that were approved by the Administrative Council for Economic Defense (CADE, for its Spanish acronym), although in another context and with four large operators, should also be considered. The question of the market is if it will also do it this time.

As it can be observed, the pathway is just beginning and the decision taken by Oi's creditors may be the first step of a long path that could end at best, just towards the end of 2021.

For the market in general, the pathway to concentration started in recent years may deepen, which will surely require the application of new rules to maintain competition levels.