Telecom Italia (TI) confirmed it is carrying out a “detailed review” of the possibility of merging TIM Participacoes, its Brazilian mobile business, with fixed operator GVT, which is owned by French media group Vivendi.
If the merger was to take place, it would be a blow to Telefonica, which previously made a €6.7 billion offer to acquire GVT, a deal which would also give Vivendi the option of taking on an 8.3 per cent stake in TI owned by the Spanish operator group.
Telefonica’s bid for GVT is likely to have been partly motivated by a desire to ease its regulatory position in Brazil.
Brazilian antitrust watchdog Cade said last year that Telefonica must completely end its association with TIM Brasil (which exists due to its stake in TI) or get a new partner for Vivo, the Spanish company’s own mobile subsidiary, if it wants to maintain control of Vivo.
Telefonica’s preferred route appeared to be the break-up of TIM Brasil and selling the firm’s assets to rivals. However, TI always maintained it wanted to hold on to the Brazilian operation..
If the TI/Vivendi deal takes place, Telefonica will lose one potential partner for Vivo (GVT), and will also need to look at other ways to dispose of its holding in TI other than offloading it to Vivendi.
The Spanish group said in July it would sell €750 million in bonds that convert to TI shares, so weakening its influence over the Italian incumbent.
According to the company, the move reduced its TI stake to a level lower than it was prior to its equity increase in TI shareholder group Telco, about which Cade was so concerned.
TI’s statement said no offer had been made and any decision to proceed with the proposal would need the approval of the corporate bodies of TI and TIM Participacoes.
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