Reuters reports that Spanish giant Telefonica has been given 18 months to loosen its grip on Brazil’s mobile market by the country’s antitrust watchdog Cade, unknown sources claim, affording the Madrid-based group time to stave off a smouldering investor rebellion concerning its growth strategy.
Earlier this month, TeleGeography’s CommsUpdate reported that Cade has 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 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, has been seen as the clearest indication yet 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.
However, the suggestion that Cade has given Telefonica an 18-month timeframe in which to comply means that the Spaniards can now pursue its preferred option – the sale of TIM Brasil by TI between mid-2014 and mid-2015 – with a stronger hand to fight the TI rebels who are against the plan. A sale of TIM Brasil – the LatAm country’s second largest mobile operator by customers valued at USD11 billion – would also help Telefonica recoup part of its loss-making investment in the Italian group.