Brazil's Cade has not ruled out TIM breakup, source says

Reuters

By Leonardo Goy

BRASILIA, Dec 9 (Reuters) - Brazil's antitrust watchdog Cadehas not ruled out the possible division of wireless carrier TIMParticipações SA into units to be bought up by localrivals, a government source familiar with the agency's reasoningtold Reuters on Monday.

Last week, Cade issued a decision requiring Spain'sTelefonica SA to exit its indirect stake in TIM or finda new partner for its own local wireless unit, known as Vivo.

In the ruling, Cade said TIM Brasil, as the local affiliateof Telecom Italia SpA is known, could not be soldentirely to another carrier operating in Brazil. Thatprohibition would not necessarily hold if TIM Brasil were brokeninto smaller units, the source said, adding that such a scenariowould be evaluated on a case-by-case basis.

That could leave more options open to Telefonica, whoseplans to gradually increase its stake in Telecom Italia havebeen snagged by antitrust concerns in Brazil, where the twocompanies control over half of the domestic wireless market.

Shares of TIM Brasil fell 0.2 percent to 11.68 reais onMonday. The stock is up 48 percent this year.

Executives at TIM and Telecom Italia have said repeatedlythere is no process underway for the sale or breakup of TIM.

Cade has still not concluded whether the Brazilian marketwould remain competitive enough with three big wireless carriersrather than the current four, according to the source.

"What Cade has said is that it doesn't want a reduction tothree companies through one taking over another entirely," saidthe source.

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