Telefónica set to run into regulatory obstacles?

4 May 2007

According to BNamericas, citing local newspaper O Estado de S Paulo, Telefónica may have to break up its assets in Brazil under regulatory pressure following its acquisition of a controlling stake in Telecom Italia. Brazilian legislation currently prohibits a single telco from operating in two different concession areas, a rule Telefónica seems set to break should the Spanish telco have control over both Vivo and TIM Brasil. Similarly, in the fixed line segment Telefónica holds a 38% stake in Brasil Telecom and has its own fixed line unit Telesp in São Paulo. The reports suggest that Telefónica’s approach will be to argue that it does not have sufficient control over Telecom Italia’s Brazilian operations and consequently isn’t violating any regulatory laws.