Speculation mounts over Telefónica’s Brazil plans

3 May 2007

BNamericas, citing Spanish business daily La Gaceta de los Negocios, reports that Telefónica may consider trading its recently acquired stake in Telecom Italia (TI) with Portugal Telecom (PT) in exchange for full control of Vivo, the Brazilian mobile joint venture between Telefónica and PT. The Spanish telco has so far insisted that – with only two representatives on the board of 19 executives – it wields insufficient power at Telecom Italia to exert a controlling influence over TIM Brasil. Brazilian newspaper Folha de São Paulo quotes a Telefónica Brasil executive as saying that Telefónica’s TI deal includes a clause that specifically prohibits Telefónica from having a say in overseas TI units that compete with Telefónica. However, the executive also admitted that Telefónica does have power of veto on the TI board, which would allow it to block any possible sale of TIM Brasil to arch-rival América Móvil.

Meanwhile, Telefónica Brasil has confirmed that a roaming agreement between TIM Brasil and Vivo is now much more likely following Telefónica’s acquisition of a stake in TI. Such a move would finally giving Vivo coverage of Minas Gerais and the northeastern states.

Brazil, Italy, Telecom Italia (TIM), Telefonica, TIM Participacoes (TIM Brasil)