Telecom Italia CEO rules in Brazil merger, stresses independence from Telefónica

Telecom Italia CEO Marco Patuano said a merger of its Brazilian unit with a local operator is not on the agenda for now, but said he does not rule out the possibility of such a move in future.

Patuano, who met Brazilian President Dilma Rousseff this week, was responding to rumours about a possible merger of TIM Brasil with local broadband operator GVT, according to Reuters. GVT is a unit of the France-based Vivendi group.

Rumours are rife that the Brazilian mobile market is due for a breakup over competition concerns, and TIM Brasil and rival Vivo have come under the spotlight because of the close relationship between their respective parent companies, Telecom Italia and Telefónica.

Indeed, Telefónica came under pressure from Brazilian regulator Cade when it boosted its investment in Telecom Italia shareholder vehicle Telco last year. Cade has ordered Telefónica to either sell its shares in Telecom Italia or dispose of Vivo.

Since then, Telco shareholders have agreed to go their separate ways, and Telefónica initiated measures that will ultimately reduce its stake in Telecom Italia from almost 15 per cent to around 9 per cent once the Telco shareholder pact has been dissolved.

Patuano also made use of the meeting in Brazil to stress that Telecom Italia operates completely independently of its Spanish shareholder, according to Bloomberg.

"I think the issue for Telecom Italia is to have a strategy that's independent from any shareholders," Patuano told reporters in Brasilia, Bloomberg reported. "This is our main interest and so far this has always been the case in Telecom Italia's relationship with Telefónica."

It is widely understood that while Telefónica has favoured a sale and breakup of TIM Brasil, Patuano has always maintained that the unit is strategic and would prefer to take a different path, with a merger with GVT one of the most frequently speculated options.

For more:
- see this Reuters article
- see this Bloomberg article

Related Articles:
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Report: Telefónica in talks to sell Telecom Italia stake
Telecom Italia shareholder Telco approves break-up, makes €830M writedown
Telefónica to be largest investor in Telecom Italia
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