Telefónica de España’s decision to increase its share in the Telco consortium, which controls Telecom Italia, created a wave of speculation in the Brazilian market. The future of mobile carrier TIM, controlled by Telecom Italia; possible candidates to buy it; the competition in the mobile telecommunication market and market concentration were debated on Tuesday. Government, regulatory agencies, competitors, lawyers and analysts tried to understand what is allowed or forbidden in that possible change in control, that according to experts creates a problem for the may links in that chain.
According to the business model announced by the Spanish telecom, the company will inject capital in Telecom Italia, guaranteeing the company’s financial balance for a period, calms down Telco’s bank partners, which needed the cash, and also stops the shares from being sold to a third party.
In the meantime, Telefónica tries to solve the regulatory engineering for the deal in Brazil and Argentina, to avoid the superposition of licenses and frequencies that would create market concentration in TIM. In Brazil’s case, if the issue is not solved, the company would control Vivo and TIM simultaneously, something regulators don’t even consider accepting. Because of that, in the way it’s conducting the deal, Telefónica wins time, since it will take over the Italian company gradually; voting shares will only be converted starting in January 2014.
Valor Economico