TI investor Marco Fossati rejects ‘enforced’ sale of TIM Brasil

9 Dec 2013

Marco Fossati, the second biggest single investor in Telecom Italia (TI) after Telco Holding with a 5% stake, has publicly opposed any suggestion of an enforced sale of the group’s Brazilian asset – TIM Participacoes (TIM Brasil) – as demanded by the local antitrust watchdog Cade last Wednesday.

In its ruling, Cade has said that Telefonica of Spain must relinquish its direct and indirect stakes in TIM Brasil or find another new partner for its own directly controlled telecom operation in the country, Telefonica Brazil (Vivo). The Cade panel also adjudged that whoever emerges as the aforementioned new partner will not be allowed to own equity in another Brazilian carrier. The ruling, which is said to be definitive, is the clearest indication yet that Telefonica’s bid to up its stake in TI, which controls TIM Brasil, faces severe obstacles if it is to be approved. In its ruling, Cade noted the Madrid group’s failure to comply with the terms of a performance agreement – signed in 2010 – in which it promised not to participate in TIM Brasil’s management decisions or raise its stake in TI. In a further blow, Cade imposed a BRL15 million (USD6.3 million) fine on Telefonica for increasing its stake in Telco Holding – which owns 22.4% of the Italian giant – and fined TIM Brasil BRL1 million for appointing a consultancy company owned by the Spanish telco.

However, in a statement released by his holding company Findim, Mr Fossati has objected to the enforced sale on the grounds that it will severely depress TIM Brasil’s multi-billion dollar value. ‘The solutions imposed by Cade on Telefonica mustn’t damage Telecom Italia. The solution cannot and must not be the forced sale of TIM,’ Fossati said. Telefonica meanwhile, has yet to decide on how it will handle the situation and is currently studying the ruling.

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