GVT vows to fight "unthinkable" breakup of TIM Brasil

Reuters

SAO PAULO, June 2 (Reuters) - The Brazilian broadband unit of France's Vivendi SA, GVT, on Monday decried the idea of breaking up rival TIM Brasil, urging regulators to kill a potential plan that would be "bad news to the consumer."

Speculation about a possible consolidation in Brazil's telecom market has circulated since last year, but GVT's statement was the first outright opposition from a rival of TIM Brasil, the local unit of Telecom Italia SPA.

"The idea of splitting TIM and selling the three pieces to the three other major mobile operators in the market is unthinkable in the current scenario," wrote GVT. "It will lead to price increases, a decrease in quality of service and lower investments in a sector that already lags compared to international benchmarks."

GVT said it would work with regulators to make sure the government does not allow a breakup of TIM Brasil, the country's second-largest wireless operator, which has nearly 74 million mobile subscribers and over 75,000 fixed broadband clients

Telecom Italia CEO Marco Patuano has repeatedly said TIM Brasil, listed as TIM Participacoes SA, is not up for sale and that Telecom Italia would consider selling it only if a high priced offer was made for the company. Patuano has also said a merger of TIM Brasil and GVT would bring together two good assets and create synergies but has dismissed speculation they are in merger talks.

Telecom Italia investors are divided over the Italian group's future strategy in Brazil. Sources close to Telefonica SA, a key shareholder in Telecom Italia, have said the Spanish group aims to break up TIM Brasil and share its assets among rivals, including Telefonica Brasil. Telefonica has repeatedly denied such plans.

Italian businessman Marco Fossati, who owns 5 percent of Telecom Italia, has spoken against such a prospect and proposed combining TIM Brasil with broadband operator GVT.

(Reporting by Brad Haynes; Additional reporting by Danilo Masoni in Milan; Editing by Diane Craft)

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