Telefonica ordered to reduce stake in TIM Brasil

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Brazil’s antitrust regulator has ordered Spanish operator group Telefonica to relinquish part of its stake in TIM Brasil or seek a partner for its own Brazilian subsidiary Vivo.

TIM Brasil’s parent company is Telecom Italia, and in September, the Italian firm’s shareholders struck a deal with Telefonica to gradually increase its stake in Telco, which owns a 22.4 per cent stake in Telecom Italia.

However, with Telefonica’s own operator subsidiary Vivo operating in Brazil, regulator CADE has expressed concerns the group has created a scenario that poses potential risk to competition.

By increasing its stake in Telecom Italia, Telefonica will gain five seats on the operator’s board, according to Ari Lopes, principal analyst for Latin America at Informa Telecoms & Media. This would contravene the conditions specified by CADE at the time it purchased the stake.

Telefonica has therefore been fined R$15m ($6.3m) and ordered to reduce its stake in TIM Brasil or partner with another firm to dilute its control of Vivo. The group initially set up Vivo in an equal partnership with Portugal Telecom, before acquiring the Portuguese operator’s stake.

One Telecom Italia investor, Marco Fossati, responded to the ruling saying “cannot and must not be the forced sale”.

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