Telecom Italia to set up committee to evaluate Brazil sale

News General Brazil 17 JAN 2014
Telecom Italia to set up committee to evaluate Brazil sale
Telecom Italia announced its intention to put in place controls to vet eventual deals involving TIM Brasil, specifying that there is no current bid for the company’s prized Brazilian unit or any plans to sell it. The controls would take the form of an “ad hoc procedure, in line with that for operations with related parties”, said the company in a statement following a board meeting held on 16 January. Directors also decided to set up a group to evaluate changes to the company’s bylaws, and said that both the Brazilian issue and governance matters will be further discussed at another board meeting on 06 February.

The main outcome of the meeting is that any possible future sale of TIM Brasil could need approval at a special shareholders’ meeting where Telefonica, if identified as a related party, would be left out of the vote. However, such a review by independent directors could shield Telecom Italia from accusations of conflict of interest. Telefonica currently controls Telecom Italia together with three Italian partners via a 22.4 percent stake held in investment vehicle Telco. Sources close to the matter have said Telefonica is looking to break up TIM Brasil and divide its assets between itself and the other two mobile operators in Brazil to circumvent antitrust issues.

In December Telefonica CEO Cesar Alierta and chief operating officer Julio Linares stepped down from Telecom Italia’s board to avoid perceived conflicts of interest in Brazil, where the two companies compete. The board confirmed at the 16 January meeting that it wouldn’t replace the directors before its term expired in April.

Findim, the holding group of Telecom Italia’s number 3 investor Marco Fossati, said in a statement that it welcomed the board's resolutions, which it said were in line with its requests. Fossati launched an unsuccessful bid to dismiss the board in December, citing conflicts of interests between Telefonica and Telecom Italia.

Categories:

General

Companies:

Telecom Italia,  TIM Brasil,  Telefonica

Countries:

Brazil,  Italy

Tags:

Production planning & operations, Corporate strategy, M&A buyouts & divestments, Officers & directors

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