Brazil's Anatel Delays Tel Italia-Telefonica Exam

MILAN -(Dow Jones)- In a surprise move, Brazilian telecommunications regulator Anatel has temporarily delayed the examination of Telefonica's purchase of a key stake in the holding that controls Italy's Telecom Italia, according to an updated version of the agenda of Thursday's meeting posted on its web site.

The issue was taken off the agenda at the request of Anatel commission members, who wanted to "deepen analysis" of the implications of the deal, said an Anatel spokesman.

"Anatel was supposed to discuss the case today but has postponed it to a future meeting after a Brazilian judge authorized America Movil to access more documents related to the Telefonica-Telecom Italia deal," a person with knowledge of the situation said Thursday.

Earlier in August, Mexican mobile phone operator America Movil was granted access to part of the documentation of the deal, the same person added, noting however that the company "has no right to make any comment until the examination of the case is concluded and Anatel makes its decision."

The Anatel spokesman did not confirm the reasons behind the delay and said there is no time frame for the commission members to discuss the issue.

The deal potentially has major consequences for the Brazilian mobile phone market, where Telefonica is already part-owner of Vivo Participacoes, the leading operator by market share, and Telecom Italia owns the second largest operator, TIM Participacoes. America Movil owns Brazil third-largest operator by market share Claro.

At 1100 GMT shares of Telecom Italia were down 0.1% at EUR2.04 in an overall positive market. They had been higher earlier.

The Telecom Italia-Telefonica deal is still awaiting the green light from Brazil's antitrust authority because both companies have overlapping operations there.

Anatel's approval of the deal is key to paving the way for Telefonica's reorganization plans, as well as for management changes at Telecom Italia.

At the end of April, Telefonica and a group of Italian financial heavyweights that includes Intesa Sanpaolo, Assicurazioni Generali and Italian merchant bank Mediobanca, bought a 23.6% stake in Telecom Italia through a newly formed holding company called Telco in a EUR4.1 billion deal. Shareholders of Telco were supposed to meet this weekend if Anatel gave a final green light to the deal.

Intesa Sanpaolo, Assicurazioni Generali and Mediobanca didn't reply to emails asking for comment.

-By Sabrina Cohen, Dow Jones Newswires, +39 02 58 21 9906; sabrina.cohen@dowjones.com

(Alastair Stewart in Sao Paulo contributed to this article)

(END) Dow Jones Newswires

Posted to the site on 30th August 2007