Telefónica must sell Vivo or TIM if it gains control of Telecom Italia, says Brasilia

The Brazilian regulators would not allow Telefónica to own both Vivo and Telecom Italia’s TIM Participaçoes unit if the Spanish telecoms giant gains control of the Italian operator, Communications Minister Paulo Bernardo said Tuesday.

Bernardo was speaking after Telefónica reached an agreement that could eventually see it gain full control over Telco, which is the major shareholder in Telecom Italia.

Vivo and TIM are the two largest cellphone operators in Brazil. Bernardo said neither would the other two large operators in the country, OI and Claro, be allowed to buy either Vivo or TIM. “One group cannot control two companies of this size,” Bernardo said.

In a parallel development, the chairman of Telecom Italia, Franco Bernabè, said Wednesday that the Italian firm has no plans to sell its operations in Brazil and Argentina as this would undermine its growth prospects. Telecom Italia owns 68 percent of Sofora Telecommunicaciones, which indirectly controls Telecom Argentina.

Bernabè said Telecom Italia needs a capital increase, adding that the necessary conditions for this to go ahead were already in place. “This is a moment of extraordinary liquidity and there are many investors prepared to invest,” he said.