São Paulo, Brazil – América Móvil’s Brazilian subsidiary, Claro, has announced a deal to acquire a majority stake in Desktop SA, a high-speed internet provider operating in the state of São Paulo, for a reported enterprise value of BRL 4.0 billion (approximately USD 750 million). The move signals Claro’s continued expansion within the Brazilian telecommunications market and aims to bolster its reach in a key economic region.
The agreement, announced Sunday, will witness Claro acquire roughly 73% of Desktop’s outstanding shares from current shareholders, including the investment fund Makalu Brasil Partners. The transaction remains subject to regulatory approval, a standard step for acquisitions of this scale within the Brazilian telecommunications sector. This acquisition represents a significant investment in Brazil’s growing digital infrastructure.
Claro will pay BRL 2.4 billion, net of Desktop’s debt, valuing the internet provider’s shares at BRL 20.82, a 45% premium over Desktop’s closing price on Friday, according to the companies’ joint statement. The payment will be made in cash, with the final amount potentially adjusted upon the closing of the deal. Following the acquisition, Claro intends to launch a public tender offer for the remaining minority shares of Desktop, offering a price per share at least equal to that paid in the initial transaction.
Expanding Broadband Access in São Paulo
Desktop currently provides high-speed internet services to approximately 1.2 million subscribers across 200 cities within the state of São Paulo, Brazil’s most populous and economically significant state. The company’s focus on delivering broadband access to a wide geographic area within São Paulo makes it an attractive asset for Claro, which is looking to expand its footprint and compete more effectively in the region. São Paulo’s robust economy and high concentration of businesses and residents create a strong demand for reliable and fast internet connectivity.
This acquisition comes at a time when demand for broadband internet is steadily increasing across Brazil, driven by factors such as remote perform, online education, and the growing popularity of streaming services. According to data from Brazil’s National Telecommunications Agency (Anatel), the country added over 1.5 million new fixed broadband connections in the first quarter of 2024 alone. Anatel regulates the Brazilian telecommunications market.
América Móvil’s Strategy in Brazil
Claro’s parent company, América Móvil, controlled by Mexican billionaire Carlos Slim, has been steadily increasing its investments in Brazil over the past several years. Brazil represents a crucial market for América Móvil, and the company has been actively seeking opportunities to expand its presence through both organic growth and strategic acquisitions. The company already offers a range of telecommunications services in Brazil, including mobile, fixed-line, and pay-television.
The acquisition of Desktop aligns with América Móvil’s broader strategy of strengthening its position in the Latin American telecommunications market. The company has been focusing on expanding its fiber optic network and offering bundled services to attract and retain customers. Analysts suggest that this move will allow Claro to offer more competitive packages and enhance its service offerings in São Paulo.
Regulatory Hurdles and Future Outlook
While the deal has been announced, it still requires approval from Brazil’s regulatory authorities, including Anatel and the Administrative Council for Economic Defense (CADE). CADE is responsible for overseeing competition within the Brazilian market. The regulatory review process will likely focus on assessing the potential impact of the acquisition on competition within the São Paulo broadband market.
Experts anticipate that the regulatory review could take several months to complete. If approved, the acquisition is expected to close in the second half of 2024. Following the closing, Claro will begin the process of integrating Desktop’s operations into its existing infrastructure. The integration is expected to involve streamlining operations, leveraging synergies, and expanding the availability of Claro’s services to Desktop’s customer base.
Looking ahead, the successful completion of this acquisition will position Claro as a more significant player in the Brazilian broadband market. The company will be well-positioned to capitalize on the growing demand for high-speed internet services and further expand its reach within the state of São Paulo and beyond. The next key step will be the official review and decision by Anatel and CADE, with a projected timeline for completion in the coming months.
We encourage readers to share their thoughts on this developing story and its potential impact on the Brazilian telecommunications landscape.
