Spain's Telefonica, Telecom Italia Could Merge By March - Paper
February 09 2010 - 11:04AM
Dow Jones News
Spain's Telefonica (TEF) and Telecom Italia (TI) could announce
a merger deal by early March, Brazilian newspaper O Globo reported
in Tuesday's editions.
Telefonica has discussed the deal with bankers and obtained
financing for the deal, which would be announced after both
companies report financial results later this month, O Globo said.
The report cited unnamed sources with knowledge of the talks.
In a filing with Brazilian stock regulators on Tuesday,
Telefonica called press reports of a possible tieup with Telecom
Italia "unfounded."
Telefonica and Telecom Italia officials declined to comment on
the report when contacted by Dow Jones Newswires.
A Telefonica-Telecom Italia would likely face a tough test from
antitrust officials in Brazil. The deal would merge the country's
largest and third-largest mobile phone companies, as well as the
fixed-line operator in Sao Paulo, Brazil's richest state.
Telefonica owns a 50% stake in mobile operator Vivo (VIVO4.BR),
Brazil's largest mobile phone company, and Telecomunicacoes de Sao
Paulo (TLPP4.BR), or Telesp. Telecom Italia, meanwhile, controls an
86% stake in TIM (TCSL3.BR) - the country's third-largest mobile
phone company.
One of the sticking points to any deal, O Globo reported, was
how to value the stakes in each companies' Brazilian assets.
According to sources, Telecom Italia's holding in TIM is worth more
than Telefonica's stake in Vivo.
Under discussion was the possible sale of Telefonica's stake in
Vivo to Portugal Telecom (PT, PTC.LB), which would then try to
arrange a partnership with Tele Norte Leste Participacoes (TNE),
also known as Oi. Portugal Telecom currently holds a 50% stake in
Vivo, as well as a stake in Internet portal UOL and technology
company GPTI.
Shares in the local operators traded higher on the report, but
accompanied the broader market. TIM's common shares rose 3.7% to
7.06 reals ($3.82), while Vivo's preferred shares were 2.9% higher
at BRL53.19. Telesp shares advanced 0.8% to BRL40.55.
The broader market as measured by the Ibovespa stocks index was
2.7% higher at 64,835 points as of 1522 GMT.
-By Jeff Fick, Dow Jones Newswires; 55-21-3288-5011;
Jeff.Fick@dowjones.com
(Giada Zampano in Rome contributed to this report.)
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