June 3, 2020 / 4:17 PM / 2 months ago

UPDATE 1-Brazil's antitrust watchdog keeps telecoms sharing between TIM, Telefonica

(Adds context on the appeal, agreement)

SAO PAULO, June 3 (Reuters) - Brazilian antitrust regulator CADE has rejected an appeal against an infrastructure sharing deal signed by two major telecoms in the country, Telefonica Brasil SA and TIM Participações SA, it said in a statement on Wednesday.

Their rival, Claro, a subsidiary of Mexico’s America Movil SAB de CV, had argued the infrastructure sharing agreement hurt competition, but CADE decided to keep its approval to the deal.

Telefonica Brasil, the Brazilian subsidiary of Spain’s Telefonica SA, operates Brazil’s largest wireless carrier under the brand Vivo. TIM, which is controlled by Telecom Italia SpA, is currently disputing the second spot with rival Claro.

In December, both TIM and Telefonica Brasil signed two infrastructure sharing agreements involving 2G, 3G and 4G networks, which would allow them to enter more than 400 new cities each in the first year only.

According to CADE, the reduction of costs for both companies through the sharing agreements “do not harm competition nor dampen the rival’s impetus to gain room in a highly disputed market”.

Besides infrastructure sharing deals, TIM and Telefonica Brasil have also teamed-up to potentially acquire the mobile unit of rival Oi SA, which has been focused on divesting assets since it filed for bankruptcy protection in June 2016.

In March, the two companies informed Oi’s advisor Bank of America of their interest in kicking off talks for a joint offer to buy all or part of Oi’s mobile division.

Shares in Telefonica Brasil were down 1% on Wednesday afternoon, while TIM’ stocks were falling around 0.8%, with both underperforming Brazil’s benchmark index Ibovespa. (Reporting by Gabriela Mello and Tatiana Bautzer; editing by Diane Craft)

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