Sawiris turns attention to Telecom Italia and TIM Brasil

27 Jan 2014

The Egyptian billionaire telecoms investor Naguib Sawiris has told a Brazilian newspaper that he would consider buying local mobile operator TIM Brasil in order to avoid the cellco being broken up and sold off to rivals. The firm is owned by Telecom Italia, which is itself controlled by the holding company Telco of which Telefonica of Spain is the largest shareholder. A move by Telefonica to increase its stake in Telco last year prompted Brazilian competition regulator Cade to insist that the Spanish firm either find a partner for its own Brazilian wireless business Vivo or offload its indirect stake in TIM Brasil. It has been rumoured that Telefonica is looking to break up TIM Brasil and split its assets between Vivo and rival players Claro and Oi/Portugal Telecom.

Reuters reports that Sawiris, in an interview with Folha de Sao Paulo, is keen to see TIM Brasil remain as an active player in the domestic mobile market and is against any idea of a break-up: ‘That is an idea defended by Telefonica on the board of Telecom Italia and I am vehemently against it, because it will devalue not just Telecom Italia shares, but also the assets of all the parts.’ Sawiris, who runs Orascom Telecom Media and Technology, is a minority shareholder in the Italian company. I told the [Brazilian communications] minister it would be an awful idea for the Brazilian government to allow the breakup of TIM,’ Sawiris told Folha. ‘I am one possible buyer of TIM, if it is sold.’

Separately, Sawiris has told Bloomberg that he could also be interested in making a move for the Italian parent company, but only if its Spanish shareholder decides to sell up: ‘I am still interested in Telecom Italia but only on two conditions: that Telefonica exits and that Telecom Italia does not sell Brazil.’ He added: ‘From a financial point of view, Telecom Italia still needs a massive EUR3 billion to EUR4 billion (USD4.1 billion-USD5.5 billion) capital increase,’ although he did not go on to suggest how much investment he might be willing to make himself.

Brazil, Orascom Investment Holding (formerly OTMT), Telecom Italia (TIM), Telefonica, TIM Brasil