Telecom Italia shareholder warns of TIM Brasil undervaluation

15 Jan 2014

A rebel shareholder at Telecom Italia (TI) has warned against a sale of the firm’s assets in Brazil, claiming in a letter to the TI board that cellular operator TIM Brasil could be worth as much as USD40 billion, which is almost three times its current market value. A report from Reuters says that Marco Fossati, whose Findim investment vehicle is the Italian telco’s third largest shareholder with a stake of 5%, has written to board members and included a study which suggests that TIM Brasil’s current standalone value is around USD23 billion, but factoring in growth prospects, potential cost savings and the effect of other benefits that rivals in Brazil would gain from a sale he says that the true value would be over USD40 billion.

TI is 22.4% owned by the Telco holding company, whose main investor, Telefonica of Spain, has been ordered by antitrust regulators to trim its operations in Brazil in order to ensure true competition in the wireless market. Although the Spanish firm was recently forced to deny rumours that it is looking to join with rivals such as America Movil’s Claro unit and Oi/Portugal Telecom to break up TIM Brasil and divide its assets, there is still strong speculation that Telefonica is keen to push through a sale of TI’s Italian operations. Telefonica controls the largest cellular operator in Brazil by subscribers, Vivo, while TIM Brasil is in second spot in the market ahead of Claro and Oi.

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