Telecom Italia (TI) and its largest shareholder Telefonica are said to clash on plans for the Italian incumbent’s Brazilian business, with the former wanting to keep it and the latter considering a sale as early as this year.
TI CEO Marco Patuano…
Telecom Italia (TI) and its largest shareholder Telefonica are said to clash on plans for the Italian incumbent’s Brazilian business, with the former wanting to keep it and the latter considering a sale as early as this year.
TI CEO Marco Patuano wants to expand TIM Brasil via an eventual merger with Vivendi’s local unit GVT, while Telefonica and Brazilian telco Oi have talked about splitting it up, Bloomberg cited people familiar with the matter as saying.
A potential deal discussed by Telefonica and Oi as recently as last month would see TIM Brasil’s assets divided between the Spanish incumbent’s Brazilian unit Vivo, Oi and America Movil’s Claro, the report stated. A financial vehicle known as Comissario Mercantil could be used to acquire TIM Brasil, with Grupo BTG Pactuel acting as agent, before it is split, according to two of the sources.
As a local carrier, Oi would lead the negotiations ahead of a potential deal after the general elections in October, the sources were cited as saying.
TI and Telefonica, the lead investor in the Italian operator’s largest shareholder Telco have declined to comment on the matter. However, Patuano told analysts in March that his company would consider a “jumbo” offer for TIM Brasil, in which it has a 67% stake.
Telefonica’s Vivo and Telecom Italia’s TIM Brasil are Brazil’s two largest mobile operators respectively. The Brazilian antitrust regulator has told Telefonica it must either reduce its stake in Telco, which owns 22.4% of TI, or find a new partner to take control of Vivo, although there is not a deadline for Telefonica to abide by the ruling.
Meanwhile, Telco looks set to be broken up shortly, with two of the three financial organisations which form part of it saying recently that they intend to exit this June.
In addition, TI has hired Morgan Stanley to manage the sale of TIM Brasil’s tower portfolio and is said to want to raise US$1bn. Bids were expected by the end of last month and, in its recent Q1 results presentation, the Milan-based telco said there had been a high level of interest from financial and strategic investors. US towercos American Tower and Cell Cite Solutions, backed by Goldman Sachs and JP Morgan’s Brazilian hedge fund, have emerged as bidders. Another potential buyer could be SBA Communications, which has said it is looking at opportunities to bolster its stock of Brazilian towers.
