Telefónica would keep TIM, Vivo separate - for now

22 May 2007

Peter Erskine, CEO of Telefónica O2 Europe, has told Reuters that the Spanish firm would keep Brazilian mobile phone companies TIM Brasil and Vivo separate at least in the medium term. In a Reuters’ interview Erskine reiterated Telefónica’s position saying: ‘Medium term cooperation is the right route forward… I don’t see the likelihood of a merger in the medium term, although you should rule nothing out.’

The long term picture is less clear though. The Spanish giant’s ultimate aim could be to take full control of Telecom Italia which, depending on the local regulatory environment in Brazil, could result in a merger of the two mobile entities. Telefónica is already on record as saying it would ‘very much’ like to secure 100% of Vivo, and to that end has been increasing efforts to achieve this goal. It is thought it might have to pay USD4 billion to buy out Portugal Telecom, which has a 50% stake in the cellco.

Brazil, Telefonica, TIM Brasil