Telefonica Ordered to Reduce its Market Share in Brazil
Published on: 5th Dec 2013
Note -- this news article is more than a year old.
Brazil's anti trust regulator has ordered Telefonica to reduce its market size and influence in the local market to its pre 2010 levels.
Telefonica currently owns its own mobile network in the country, but is now also a major stakeholder in the company that controls Telecom Italia, which also has a mobile network in Brazil.
The anti-trust regulator, Cade said that the combination of TIM and Telefonica in the country means the company controls over half the mobile phone market.
Cade suggested that the sale of Telecom Italia's Brazilian operations -- as has been widely rumoured -- would resolve the issue. However, Telecom Italia has repeatedly said that it wont sell its majority stake in the Brazilian network, and Telefonica's holdings don't allow it to overrule the Board on Latin American deals.
Telecom Italia is however struggling under a debt mountain, and is under increasing pressure to sell the Brazilian stake, which is worth around US$11.5 billion. The declaration from the Brazilian regulator is likely to add to the pressure for a sale.
The regulator added that if Telecom Italia doesn't sell, and Telefonica doesn't reduce its stake in the Italian company, then it will have to sell some of its stake in its own Brazilian network.
Telefonica did look at a stock market listing for the company recently, but backed away from it. An IPO would meet the regulators demands though, without affecting its Italian investment.