Telefonica has reportedly been given 18 months to comply with a directive issued by Brazil’s antitrust regulator Cade, which is concerned about the influence the Spanish operator has in the country’s mobile market.
Telefonica, which owns Brazilian…
Telefonica has reportedly been given 18 months to comply with a directive issued by Brazil’s antitrust regulator Cade, which is concerned about the influence the Spanish operator has in the country’s mobile market.
Telefonica, which owns Brazilian operator Vivo, recently raised its stake indirectly in Telecom Italia (TI), which also has a Brazilian subsidiary – TIM Brasil.
Cade has said that Telefonica must either reduce its stake in TI’s controlling shareholder Telco – which it took control of in September, thus giving it sway over TIM – or find a new partner to take joint-control of its direct subsidiary Vivo.
The 18 month period – first reported by Reuters citing sources – would allow Telefonica to engineer a disposal of TIM by TI, widely reported to be its preferred option.
A TI shareholder has called an EGM for tomorrow and the future of TIM is on the agenda. Marco Fossati, who owns around 5% of TI’s stock, has proposed to oust the Italian incumbent’s board, which he says is acting in the interests of larger shareholders such as Telefonica. In recent weeks the proposal has been endorsed by proxy advisers ISS and Glass Lewis.
In a report earlier this month, Bernstein suggested that controlling the future of TIM – the only operator with more subscribers than Vivo in Brazil – was the chief motivation for Telefonica’s takeover of Telco.
That stake increase could now lead to a break-up of TIM, meaning Telefonica’s Brazilian subsidiary Vivo would have one less competitor. Analysts have also suggested that TIM could otherwise be sold to another buyer, or merge with fixed-line operator GVT.
