Exclusive: Telefonica gets time to loosen grip in Brazil
By Julien Toyer
MADRID (Reuters) - Telefonica has been given 18 months to loosen its grip on the Brazilian mobile phone market, sources said, time which may help the Spanish group ward off an investor rebellion against its strategy.
Brazil's antitrust watchdog this month told Telefonica to either sell its interest in TIM Participacoes, the local wireless unit of Telecom Italia, or seek a new partner for its market-leading Vivo mobile business. The regulator, Cade, did not say at the time how long Telefonica had to comply.
The 18-month timeframe means Telefonica can pursue its preferred option - a sale of TIM by Telecom Italia between mid-2014 and mid-2015 - and will strengthen its hand against rebel Telecom Italia shareholders who oppose the plan.
Telefonica partly owns TIM via its 15 percent stake in Telecom Italia and is at odds with other investors over how to revive the debt-laden Italian firm, one of the country's largest employers.
One investor, Marco Fossati, is pushing for the removal of Telecom Italia's board at a meeting on Friday.
A sale of TIM - Brazil's second-largest mobile operator by customers valued at $11 billion - would also help Telefonica recoup part of its loss-making investment in Telecom Italia.
Telefonica's goal is to break up TIM and divide its assets and network between itself and the other two mobile operators in Brazil, America Movil, and Oi, say sources familiar with Telefonica's plans.
Three sources familiar with the matter said Cade had given Telefonica 18 months to comply with its ruling. Continued...