Oct. 10 (Bloomberg) -- Brazil is open to a transaction between the local units of Telefonica SA and Telecom Italia SpA and may require asset sales within a year to approve any deal, said a government official with direct knowledge of the matter.
Regulators, concerned that a deal would hurt service quality, would seek to prevent the phone companies from accumulating a concentration of regional airwave licenses, said the official, who asked not to be identified because the scenario is hypothetical. Neither company has sought authorization for a transaction, the official said.
Telefonica, Telecom Italia’s largest shareholder, struck a deal last month to gradually increase its stake, providing a path to take control of the Milan-based phone carrier. That would give Madrid-based Telefonica power over both companies’ Brazilian units, who together have more than half of the country’s mobile-phone lines.
Telecom Italia has valued its 67 percent stake in Tim Participacoes SA, its Brazilian unit, at a minimum of 9 billion euros ($12 billion) in preparation for any possible sale, a person with direct knowledge of the matter said this week. Telefonica may seek to acquire Tim and then sell parts of the company to its other Brazilian competitors, America Movil SAB and Oi SA, analysts at HSBC Holdings Plc have said.
--Editor: Crayton Harrison