By Matthew Cowley
SAO PAULO--Brazil's antitrust agency on Wednesday threw a
spanner in Spanish telecommunications company Telefonica SA's (TEF,
TEF.MC) plans to take a larger stake in European rival Telecom
Italia (TI, TIT.MI) on the grounds that it would harm competition
in Brazil's mobile-phone market.
Telefonica opted earlier this year to increase its stake in
Telco, a holding company that owns 22.4% of Telecom Italia. As a
result, Telefonica will take effective control of the heavily
indebted Italian firm early next year.
"Either Telecom Italia sells TIM in Brazil, or Telefonica must
leave its stake in Telecom Italia," CADE President Vinicius Marques
de Carvalho said in a statement.
Telefonica and Telecom Italia each control the nation's two
largest mobile-phone companies, Vivo and TIM Participacoes SA
(TSU), respectively. At the end of October, Vivo had 77.4 million
customers, equivalent to 28.7% market share, and Telecom Italia's
TIM SA had 73.2 million customers, or 27.1% share.
A spokesman for Telefonica in Brazil said the firm is evaluating
CADE's decision.
Telecom Italia has consistently ruled out selling its Brazilian
division, which accounted for 26% of the firm's revenue through
September.
Meantime, Telefonica was also fined 15 million Brazilian reais
($6.35 million), while TIM was fined BRL1 million. CADE said that
the purchase of additional shares in Telecom Italia by Telefonica
had contravened a 2010 deal signed between the companies and CADE
to avoid a conflict of interest. In April 2010, Telefonica agreed
to a series of commitments with CADE to be able to buy its original
minority stake in Telco.
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