TIMB TIM SA

SÃ O PAULO—LetterOne, an investment firm led by Russian billionaire Mikhail Fridman, on Thursday said it no longer planned to invest in Brazilian telecommunication company Oi SA after Oi's hopes for a tie-up with TIM Participacoes collapsed.

In October, LetterOne, or L1, announced a plan to invest $4 billion in Oi on condition of an Oi merger with TIM Participacoes.

In August of 2014, Oi said it had hired Brazilian investment bank BTG Pactual to look into acquisition and merger possibilities in Brazil, including a potential deal with TIM Participaç õ es.

The planned capital injection by LetterOne was a key step in the potential merger, according to analysts, as it would be used to reduce Oi's debt.

"L1 Technology has been informed by TIM that it does not wish to enter into further discussions, about the facilitation of a merger between Oi and TIM in Brazil," LetterOne said in a statement.

TIM, a local unit of Telecom Italia, declined to comment.

Oi said that it was informed about TIM's decision by LetterOne. Oi said it would evaluate its next options.

"Oi will continue to undertake its efforts towards operational improvements and business transformation focusing on austerity, infrastructure optimization, revisions of procedures and commercial actions," it said.

TIM is the second-largest mobile phone operator in Brazil, in terms of market share, while Oi is the fourth largest. Meanwhile, Oi has a strong presence in the landline-phone market, with a 35% market share, TIM doesn't have a relevant position in the fixed-phone and broadband markets, according to analysts.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com

(END) Dow Jones Newswires

February 25, 2016 10:35 ET (15:35 GMT)

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