Vivendi’s Brazilian broadband operator GVT has said it opposes the break-up of TIM Brasil. The operator made the comments following reports that Telecom Italia (TI) and TI’s largest shareholder, Telefonica, are at odds over what to do with the…
Vivendi’s Brazilian broadband operator GVT has said it opposes the break-up of TIM Brasil. The operator made the comments following reports that Telecom Italia (TI) and TI’s largest shareholder, Telefonica, are at odds over what to do with the telco.
GVT said a break-up of the mobile operator would “lead to price increases, decrease in quality of service and lower investments in a sector that already is behind on prices and quality compared to international benchmarks”, according to a company statement.
GVT, which could potentially merge with TIM, has said that if necessary it will work with the government and regulator Anatel to help avoid a split, which it described as an “unthinkable” prospect. The fixed-line player added that it had not held talks with TIM regarding a merger.
TI CEO Marco Patuano was reported to be keen on TIM remaining independent and eventually merging with GVT. However Telefonica, which has the largest stake in TI’s controlling shareholder group Telco, is said to prefer a break-up of the operator.
That scenario would see TIM’s assets split between Telefonica’s subsidiary Vivo, America Movil’s local Claro unit, and Oi. As a result the Brazilian wireless market would reduce from four major network operators to three.
As a local carrier, Oi would lead the negotiations ahead of a potential deal after the general elections in October, the report said. A financial vehicle known as Comissario Mercantil could be used to acquire TIM Brasil, with BTG Pactual acting as agent, before it is split, according to the report.
Analysts from Bernstein Research have previously speculated that Telefonica raised its stake in TI last year as a pre-emptive step to block a merger between TIM and GVT, which could harm its Brazilian operations.
TI and Telefonica, the lead investor in the Italian operator’s largest shareholder Telco 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.
