The CEO of TIM Brasil has suggested a solution to the antitrust issue created by Telefonica – which owns TIM’s Brazilian rival Vivo – taking control of its parent Telecom Italia.
Speaking to reporters in Rio de Janeiro, Rodrigo Abreu said that an…
The CEO of TIM Brasil has suggested a solution to the antitrust issue created by Telefonica – which owns TIM’s Brazilian rival Vivo – taking control of its parent Telecom Italia.
Speaking to reporters in Rio de Janeiro, Rodrigo Abreu said that an existing agreement that stops Telefonica’s representatives on TI’s board influencing TIM could be extended once the Spanish operator completes its takeover of the Italian incumbent’s controlling shareholder, Telco.
Telefonica is already a shareholder in Telco, which holds 22.4% of TI. In September the operator announced plans to raise its stake by acquiring shares from fellow investors Generali, Intesa Sanpaolo and Mediobanca.
Should it receive the required regulatory approvals, Telefonica will hold 70% of Telco, including 64.9% of the voting capital.
This would give Telefonica control of TI and thus TIM which, in addition to Vivo, would see it manage the two largest wireless operators in Brazil.
Telefonica’s interest in TI is longstanding and an agreement whereby the Spanish incumbent’s representatives refrain from voting on decisions pertaining to Brazil has appeased regulators since 2007.
However, the fact that Telefonica is now looking to take control of TI has focused minds in Brazil, and the country’s communications minister has already spoken out against any ideas of consolidation.
Industry watchers have speculated that TIM may be broken up and acquired by Brazil’s three other main wireless operators, while others have said an outright sale that maintains four large players in the market is a more likely outcome.
Bernstein Research analyst Robin Bienenstock believes that what happens to TIM will be very significant to the market and that a game-changing deal could happen.
For instance, a combination between TIM and broadband operator GVT, owned by Vivendi, “would be a kind of super telco in Brazil”, she said in a memo.
“GVT has fibre everywhere but Sao Paulo, TIM Brasil has fibre in Sao Paulo and wireless everywhere. That combination is a frightening combination to Telefonica, to America Movil and also to Oi.”
