Telefonica considers legal challenge to Cade ruling

Madrid-based telecoms giant Telefonica is said to be considering legal action against the Brazil antitrust watchdog Cade, which earlier this month ruled against the Spanish group’s plans vis-a-vis Brazil. As reported by TeleGeography’s CommsUpdate, Cade ruled that Telefonica must relinquish its direct and indirect stakes in mobile operator TIM Participacoes (TIM Brasil) or find another new partner for its own directly controlled telecom operation in the country, Telefonica Brazil (Vivo). At the meeting held on 4 December, Cade bosses 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 being seen as a clear indication that Telefonica’s bid to up its stake in Telecom Italia (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. ‘Telefonica and Vivo are currently analysing the extent of Cade’s decision and will make a statement when it deems opportune,’ the two companies said in a joint statement.