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Telecom Italia chairman says firm not keen to relinquish TIM Brasil

4 Jul 2014

Telecom Italia (TI) chairman Giuseppe Recchi has told the Il Sole 24 Ore newspaper that his firm is keen to retain its controlling stake in Brazilian operator TIM Participacoes (TIM Brasil) as it generates roughly one-third of consolidated group revenue, but he did not rule out a sale. TIM Brasil is the country’s second largest mobile operator with around 70 million customers. However, Recchi told the paper ‘Selling, for everyone, is always an option; it depends on the price,’ before reiterating that ‘For us [TIM Brasil] is a source of one third of our revenues, it’s strategic.’ The chairman’s statement matches those of CEO Marco Patuano who is on record as saying that the Brazilian unit is not for sale.

Last month, Spanish giant Telefonica lost its appeal against the ruling issued by Brazil’s antitrust regulator (Cade) to scale back its operations in Brazil, specifically that it must reduce its influence over TIM Brasil, the local unit of TI, or find a new partner for its own Brazilian mobile venture, Vivo. According to local press reports the Spanish parent favours the first option, despite the Italians’ desire to hang on to the asset.

In December 2013, CommsUpdate reported that Telefonica was given 18 months to loosen its grip on Brazil’s mobile market by Cade, after ruling that the Madrid-based group relinquish its direct and indirect stakes in mobile operator TIM Brasil or find another new investor for its own directly controlled telecom operation in the country. 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, was seen as the clearest indication yet that Telefonica’s decision to up its stake in TI – which controls TIM Brasil – via the consortium Telco, 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. The Telco consortium owns 22.4% equity in the Italian group.

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

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