Anatel to Assess TEF, TI Deal on Aug 30

Brazilian telecoms regulator Anatel plans to meet on August 30 to assess the impact on the local telecoms market of Spanish giant Telefónica's acquisition of Telecom Italia, an Anatel press officer confirmed to BNamericas.

In April Telefónica indirectly acquired a 23.6% controlling stake in Telecom Italia with a consortium of Italian firms, in theory giving it a degree of influence over Brazil's second largest mobile operator TIM Brasil.

Authorities are concerned about the market becoming monopolistic given Telefónica already has a 50% stake in the country's largest mobile operator Vivo.

The press officer would not confirm reports in an Italian newspaper Il Sole 24 Ore that Anatel is likely to approve the deal with restrictions to ensure Telefónica does not retain any operational decisions in TIM.

"We will have to wait until the [board] meeting to know whether the counselors will approve the subject," the press officer said.

According to Luis Minoru, managing director of Yankee Group Latin America, the onus is on Telefónica to show that it will not have any operational control over TIM in Brazil.

However, one option is to allow its stake to be managed under trust, as is the case with Telecom Italia's 38% stake in Solpart, a holding company that controls fixed line group Brasil Telecom, he told BNamericas.

Telecom Italia entrusted the stake to investment bank Credit Suisse because of the perceived conflict of interest between Brasil Telecom's mobile arm Brasil Telecom GSM and TIM Brasil.

The Telefónica issue will be only one of 18 subjects on the agenda for Anatel's five-member board, the press officer said.

If Vivo and TIM Brasil were to join forces, they would have over 50% of Brazil's 108mn mobile subscribers. The country is the world's fifth largest mobile phone market.

TVA

The board of Anatel will also assess in its meeting Telefónica's acquisition of local pay TV company TVA, which the watchdog approved in July with certain restrictions, the press officer said.

The main condition is that shareholders of Telefónica will have to relinquish powers of veto in TVA for decisions concerning the industrial hub of São Paulo, which is TVA's mainstay.

Telefónica already holds a fixed line concession contract in São Paulo via fixed line operator Telesp, and current legislation prohibits an operator owning both a fixed line and cable company in the same concession area.

Posted to the site on 29th August 2007