Report: Telefónica plans Tim Brasil sale as Telecom Italia plots defence strategy

Telefónica is planning to buy and then break up Tim Brasil together with local rivals América Móvil and Oi, according to a report in a report in Italian daily Il Sole 24 Ore. However, Telecom Italia issued a statement that it is "not aware of any offer for Tim Brasil" and reiterated that it regards its Brazilian unit as a strategic asset.

The Il Sole 24 Ore report said on Friday that an offer for Tim Brasil unit, which has a market value of about $13 billion (€9.56 billion), could come before the end of the month, although the paper did not reveal its sources.

Bloomberg then reported, according to unnamed sources, that some Telecom Italia directors are attempting to make it more difficult for Telefónica to sell the Brazilian unit. The sources said the directors, backed by Telecom Italia CEO Marco Patuano, are proposing a motion that would ensure any potential offer for the Brazilian unit is placed under the scrutiny of a special committee. Telecom Italia's board is set to vote on the motion on Jan. 16 meeting, the sources told Bloomberg.

Telefónica is under some pressure in Brazil following its move to increase its influence over Telecom Italia via the Telco shareholder vehicle, which holds 22.4 per cent of the Italian operator. The Spanish operator competes with Telecom Italia in Brazil through its local Vivo unit.

Brazil's competition watchdog Cade last month told Telefónica to either sell its interest in Tim or reduce its stake in Vivo. Reuters previously reported that Cade has given the operator 18 months to comply with its ruling.

"Though (Telecom Italia) CEO (Marco) Patuano has repeatedly reconfirmed the strategic nature of Tim Brasil, a sale by Telecom Italia always seemed to us the most likely solution to meet the conditions set by the Brazilian antitrust (regulator)," Milan broker ICBPI said in a note on Friday, Reuters reported.

Bloomberg noted that the Brazilian sale reports drove Telecom Italia's shares to a three-month high, with shares rising 7.5 per cent.

For more:
- see this Il Sole 24 Ore article (sub. req.) (translated via Google Translate)
- see this Reuters article
- see this Bloomberg article
- see this separate Bloomberg article
- see this Ansa article

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