Anatel says Telefonica must keep Vivo, TIM separate

24 Oct 2007

The Brazilian telecoms regulator Anatel said yesterday that as a condition for approving Telefonica’s acquisition of a controlling stake in Telecom Italia (TI) it will insist the Spanish firm keeps mobile units Vivo Participacoes and TIM Brasil separate. The watchdog has appended no fewer than 28 conditions to the deal and given Telefonica and TI six months to comply if they want the tie-up to be approved.

The Spanish telecoms giant is heading up a group which includes Italian investors, looking to purchase 18% of Telecom Italia from Pirelli by 15 November. The transaction is to be conducted through its holding company Telco, which will end up owning 23.6% of Telecom Italia. Yesterday, several Italian press reports suggested the deal could close later this week with Il Sole 24 Ore saying that the transaction will close on Thursday. The Brazilian authorities must also approve the deal however, given that Telefonica owns a 50% equity stake in Brazil’s leading mobile operator by subscribers, Vivo, and Telecom Italia owns number two player TIM Brasil.

Vivo is Brazil’s largest mobile operator although its market share shrank from 28.05% in August to 27.78% at the end of September, according to telecoms watchdog Anatel. Meanwhile, TIM saw its market share grow 0.16 percentage points to 25.87% in the same period, and the country’s third largest mobile operator Claro increased its share by 0.06 points to 24.82%. Locally owned Oi (part of the Telemar group) saw its mobile market share climb 0.09 points to 13.21%.

At the end of September GSM technology accounted for 74.2% of all mobile lines in Brazil, followed by CDMA technology with 20.1% and TDMA lines with 5.7%.