Brazil watchdog cleared to rule on T Italia deal

Anatel, Brazil’s telecoms regulator, was on Wednesday given the go-ahead to rule on the proposed purchase of a stake in Telecom Italia by Telefónica of Spain, bringing closure of the €2.3bn ($3.14bn) deal a step closer.

The decision by a judge in Brasília marks the latest skirmish in a battle for domination of the country’s fast-growing mobile telephone market.

Earlier, another court had suspended Anatel’s deliberations at the request of Claro, Brazil’s third-biggest mobile operator, controlled by Mexican billionaire Carlos Slim.

Claro demanded access to the documentation being studied by Anatel, arguing that Telefónica’s purchase of Telecom Italia affected its business because of the potential concentration of market share in Telefónica’s hands. A court official said the judge had ruled that Claro must wait its turn with other operators to see details of the deal until after Anatel’s ruling. The decision is open to appeal.

Telefónica agreed in April to join a consortium taking control of Telecom Italia. Anatel must rule on the deal because both have big interests in Brazil. Telefónica owns half of Vivo, the biggest mobile operator, in a joint venture with Portugal Telecom. Telecom Italia’s mobile unit, TIM, is the second-biggest operator.

Observers said Claro’s move was a spoiling tactic. “It’s good to see two big players really go at it,” said one unnamed analyst.

When the deal between Telefónica and Telecom Italia was first announced it was itself widely seen as a spoiling tactic by Telefónica to stop the advance of Mr Slim’s companies, Telmex and América Móvil, across the region. Mr Slim had tried to buy Telecom Italia in a joint venture with AT&T that came to nothing.

Indeed, analysts say a potential merger between the Spanish and Italian companies’ mobile units – which would give Telefónica more than half of the domestic market – has never been on the cards. Telefónica agreed from the outset to take no part in decisions affecting TIM’s operations around the world.

“What Telefónica paid for was a clause in the contract that prevents Telecom Italia from selling its assets to a competitor,” said Samuel Possebon of Teletime, a Brazilian telecommunications industry web site and magazine.

Brazil and other Latin American markets are of critical importance to Telefónica and Mr Slim’s companies. Fixed telephony in the region is reaching maturity but the mobile market still offers plenty of growth – more than in mature markets such as Europe.

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