MILAN Jan 3 Telefonica is working on a joint offer to take over TIM Participacoes and break up the local wireless unit of Telecom Italia also known as TIM Brasil, an Italian daily said on Friday citing "reliable sources."
Brazil's antitrust watchdog last month told the Spanish telecoms group to either sell its interest in TIM Brasil or seek a new partner for its market-leading Vivo mobile business.
Il Sole 24 Ore newspaper said Telefonica, which partly owns TIM Brasil via its 15 percent stake in Telecom Italia, is looking to set up an investment vehicle with its two main rivals on the Brazilian mobile market to buy the unit and break it up.
The two rivals are Carlos Slim's America Movil, owner of mobile operator Claro, and Brazil's Oi.
Telefonica declined to comment. Telecom Italia was not immediately available for comment.
The paper said investment bank Pactual is working on the deal. The vehicle could receive financing from state-owned banks to promote consolidation in the sector.
It added an offer for TIM Brasil could be ready before the end of the month, and said the board of Telefonica would meet at the beginning of next week to discuss the issue.
Italian daily Il Giornale reported that Telefonica's strategic committee could meet on Monday to discuss the matter.
In December sources told Reuters Telefonica had been given 18 months to loosen its grip on the Brazilian mobile phone market, giving it time to pursue its preferred option of a sale of TIM by Telecom Italia between mid-2014 and mid-2015.
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