Brazilian telecoms operator Oi (formerly Telemar) confirmed yesterday it is holding talks to purchase rival operator Brasil Telecom (BrT) for BRL4.8 billion (USD2.7 billion). If completed, the move will create the largest telecoms company in the country with fixed line operations in virtually all 27 Brazilian states and revenues which would have totalled USD12 billion in the first nine months of 2007. It would also increase the company’s mobile market share from the current 13% to close to 17%. Moreover, a tie-up between Oi and Brasil Telecom would reduce the likelihood of the domestic telecoms industry being controlled by a foreign-owned duopoly. Telefonica of Spain and Mexico’s Telmex are the two main fixed line and mobile operators in Brazil and the government has long been concerned that neither Oi nor Brasil Telecom is strong enough on its own to take on the financial might of the Spanish and Mexican-backed enterprises. Telefonica is dominant in Sao Paulo state, and has a 50% stake in the number one mobile operator by subscribers, Vivo, while the Mexican firm controls fixed line operator Embratel and cellco Telecom Americas (Claro).