Magalu and Amazon Interested in Buying Correios, Says Minister of Communications

RIO DE JANEIRO, BRAZIL – Minister of Communications Fábio Faria said on Wednesday that there are five companies interested in the privatization of Correios. In a live streaming on social media, he mentioned four: the retailer Magazine Luiza, the American e-commerce giant Amazon, and the foreign logistics companies DHL and FedEx.

“The most significant aspect is that there are already five interested players. Magalu is one of them, Amazon, DHL and FedEx. There are now people, groups interested in acquiring the Correios, so this is important, because we will not have an empty privatization process”.

Magalu and Amazon are among the giants fighting in the Brazilian e-commerce to reduce their products delivery times and attract more customers.

The increase in sales in Rio de Janeiro has prompted Magalu’s decision to open a distribution center in the state this year and physical stores as of next year.

Faria said that the National Congress should decide how the stock control would operate and the obligations of the company that will buy the Correios in the privatization process.

“There are companies interested in filling this space, and they know you get the bonus and the burden too, but it is a healthy company”.

The Minister said he called for the matter to be under his responsibility in the Ministry and will talk with leaders of Congress and the presidents of the Chamber and Senate to articulate the progress of the privatization project.

Minister mentions strike as favoring privatization

In addition, he stressed that specific issues, such as the universalization of services, will also be discussed by legislators:

“With respect to the universality of deliveries, delivering in the interior of the Amazon, Rio Grande do Sul, other states, regarding employees, whoever is good will remain, not least because the company must proceed, this is discussed in the National Congress.”

The Minister used the Correios workers’ strike as an argument for privatization. Faria criticized the strike during the pandemic and said that this would not occur in a private company.

“I didn’t even get into the merits of the strike, it was the President of the Correios himself who debated it. I think that [the strike] was very negative for them, because this is a moment when everybody needs to give their best”.

Oi Sale

In the same broadcast, the Minister said that he spoke with the president of the Administrative Council of Economic Defense (CADE ), the federal antitrust agency, to call for “speed” in the analysis of the sale of Oi.

According to the Minister, the answer he received from the CADE president, Alexandre Barreto, was that the examination of the purchase of Oi by Tim, Vivo and Claro, would take time because it would need to be conducted state by state. The CADE intends to prevent problems with competition in the sector.

“The president [of CADE] said that the three have penetration in the whole country, he has to assess this state by state and it would take a little longer, it would take months. I mentioned our wish for this to be done as soon as possible because Oi has a negative annual result and if this were to take almost a year, it will increase Oi’s debt by R$5 billion in the current year”.

Faria said that he “opened dialogue” with Barreto, who retained the idea of analyzing it state by state. “I have been discussing it an awful lot, he is a good president, but he said, look I need to check this state by state and see how this point will work, it is very negative for us if each company gets virtually one-third of the market.”

The Minister then reported that the CADE is happy if each company gets a slice compatible to its size. “If each one buys within its size and it increases each one within what it had without it being a combined deal between them, then the CADE welcomes it and I have already received the feedback that it will be done this way. We will be working together with them in order to have greater clarity about this.”

According to the Minister, the government takes no side in the bid and would be a facilitator of the deal. “We’ve been talking with the ANATEL, which is a major creditor of Oi, there are also the government banks in discussions and finding that Oi has the medium-term capacity to pay off these debts.”

Source: O Globo