Citigroup under increasing pressure in battle for Brasil Telecom

8 Mar 2004

US bank Citigroup is coming under increasing pressure to reveal the extent of its non-banking interests in Brazil as it continues to battle for ownership of Brasil Telecom. Telecom Italia and a number of Brazilian pension funds claim that Citigroup has an undisclosed interest in Brasil Telecom. The stake in question is said to be held through US-based Cable Systems Holding LLC (CSH LLC), itself a subsidiary of CVC Opportunity, a private equity fund that deals with Citigroup’s Brazilian non-banking assets. In Brasil Telecom’s 2002 Annual Report the operator claims that CSH LLC is owned by the Woog family of Arizona and not CVC/Citigroup; the family have declined to comment but unnamed sources have indicated that the report is incorrect. Telecom Italia and CVC were among the main investors in Brasil Telecom when it was privatised in July 1998. The Italian group pulled out of Brasil Telecom’s holding group in August 2002 to launch its mobile operator, Telecom Italia Mobile, in the country. The Italian operator has maintained that leaving Brasil Telecom was only a temporary measure but CVC is now trying to block it from retaking its holding interest in the telco.