Italian telecoms giant Telecom Italia (TI) yesterday rejected press reports of a merger between its Brazilian mobile unit TIM Participacoes (TIM Brasil) and Brasil Telecom (BrT), the country’s second largest fixed line player, as ‘completely unfounded’. The local daily Folha de Sao Paulo had quoted sources close to JP Morgan as saying that TI had approached BrT, in which it has an equity interest, concerning a strategic merger with TIM Brasil. According to Folha, following the merger the Italian firm would run the new enlarged entity. However, a spokesman for TI has told Reuters that the press report is ‘unfounded’ and wrong.
Any move to merge TIM Brasil and BrT would face significant regulatory hurdles since both TI and Brasil Telecom hold long-distance and mobile licences. One or the other would be forced to relinquish its licences to maintain a fair and level playing field.