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Small shareholders in Telecom Italia recommend merger for TIM Brasil

Telecom Italia’s small shareholders are calling for the operator to merge its Brazilian unit TIM Partecipacoes with fellow operator Oi rather than selling it outright.

Asati – a shareholder group comprised of 6000 small investors holding a collective 1% stake in Telecom Italia – has expressed its opinion that the operator must not undervalue TIM.

Oi has previously expressed interest in acquiring TIM Brasil, which is considered a likely target for consolidation in the Latin American country. It was recently reported that Oi had lodged a joint bid for Telecom Italia’s Brazilian unit with rivals Claro and Vivo, although the integrated operator denied this.

While TIM’s Q3 results saw an increase of 10.6% in net profit (up to BRL348.3 million), its revenue was down 4.1% to BRL7.2 billion. Mobile revenue dropped by 3.4% to BRL5.8 billion.

TIM noted that the downturn had been “observed for the industry as a whole” and was primarily affected by declines in SMS and mobile termination rates. Its outgoing voice and data business grew by 2.1%, although a decline in subscriber rates was blamed on “already high penetrated market, people using multiple SIM-cards and, a less dynamic economic environment”.

This to some degree could be assuaged by consolidation. Growth could also come from encouraging subscribers to adopt postpaid services in a market dominated by prepaid customers.


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