Telecom Italia and Telefonica lock horns over TIM Brasil break-up plan

2 Jun 2014

Telecom Italia (TI) and its single largest shareholder, Telefonica of Spain, have reportedly locked horns over how to proceed with the Italian group’s Brazilian business TIM Participacoes (TIM Brasil), according to people familiar with the matter as reported by Bloomberg. It is understood that while TI’s chief executive officer Marco Patuano favours a plan to retain TIM Brasil and then expand its reach through a merger with Vivendi’s Brazilian unit GVT, Telefonica (which owns the Vivo brand) and Oi SA (Brazil’s fourth largest wireless carrier) instead prefer a plan to break up TIM Brasil as early as this year. The news agency cites sources who asked not to be named because the discussions are confidential. As recently as April this year Telefonica and Oi SA reportedly discussed a plan to break up TIM Brasil and divide its assets among Oi, Vivo and Claro – the local unit of America Movil (AM). One scenario under consideration would involve the use of a financial vehicle, dubbed Comissario Mercantil, to acquire TIM Brasil and then split the business among the other operators, the sources said. TIM Brasil has a market value of USD13 billion and Milan-based TI owns 67% of the company.