Brazil’s Oi threatens action as Sky pulls out of DTH acquisition deal

Brazilian pay TV operator Sky Brasil has unilaterally pulled out of a deal to acquire the DTH satellite TV base of Oi, leading to consternation among the telecom operator’s management.

Sky has said that it terminated the agreement after failing to reach an agreed renegotiated settlement on terms.

In a CVM/SEC regulatory filing, however, Oi said that it considered Sky to be in breach of a preliminary agreement signed by the pair and could take action to protect its rights if talks with Sky failed to deliver a resolution.

“Considering the successive interactions maintained between the Parties, first with the participation of AT&T (former controller of Sky), then with the Werthein Group (after the change of control of Sky) to negotiate the binding terms of the Transaction, and Oi’s full collaboration to carry out the Due Diligence, providing SKY with all the information necessary to confirm the Relevant Information after the signing of the Term Sheet, the Company informs the market that it considers the unilateral termination of the Transaction to be in disagreement with the terms of the Term Sheet signed between the Parties,” the telco said.

“As a result, Oi informs that it will initiate a new discussion with Sky regarding the consequences of the said unilateral termination, being certain that, if further interactions are not productive, it will evaluate the measures it deems appropriate to protect its rights.”

Oi has been banking on the sale of key assets, including its DTH base, to recover its finances after filing for bankruptcy protection in March.

That filing came only four months after the debt-burdened operator exited a previous period of bankruptcy protection in December last year after six years.

Sky’s deal to acquire Oi’s DTH based was originally signed in April last year, with the pay TV operator agreeing to pay about BRL786 million (US$154 million) for the DTH subscribers and services connected to Sky’s IPTV infrastructure.