Brazil Remains Hot-Spot for Battling Telecoms

Jacob Harper  |

Though things have been relatively quiet as of late on the international telecom front, the world’s biggest telecom players have certainly not quit jockeying for position. One of the world’s largest emerging markets, Brazil, continues to be a point of major interest for telecoms, and a source of considerably intense bickering and maneuvering.

The country's second-largest mobile provider, the beleaguered Telecom Italia SpA (TI) , has struggled mightily for years and appears vulnerable. Since ceasing to be a government-sanctioned monopoly, the company has lost money for nine straight years, and has repeatedly looked to shed valuable assets.

However, despite its history in the red, Telecom Italia maintains a sizable presence in both Europe and South America, with Brazil being its most coveted market. Spanish telecom Telefonica has been aggressive in the pursuit of Telecom Italia’s Brazilian presence, notably their Brazilian mobile unit, TIM Brazil.

Telefonica’s bid to buy a larger stake in Telecom Italia was rejected by shareholders in Sept. 2013. An earlier bid to merge Teelcom Italia with Hong Kong conglomerate Hutchison Wampoa and inject much needed capital into the company fell through as well.

With Telecom Italia going it alone, the company has doubled down on Brazil. Freshly-installed company head Marco Patuano recently told the Mobile World Congress that “(Telecom Italia is) here to stay, we are investing, we are making our network better, we are not dismantling our company waiting for the inevitable end.”

As Telecom Italia hangs on and refuses to acquiesce, Brazil remains a highly competitive – and thus less profitable – market. The aforementioned Telefonica has a major stake there, as does Mexican powerhouse America Movil. The three companies are locked in a tight race, with Telefonica’s Vivo sporting 76 million subscribers, compared to Telecom Italia’s 72 million and America Movil’s 67.4 million.

Near the end of trading on March 3 Telecom Italia had fallen 3.79 percent to hit $10.92 a share. The company is up 18.85 percent on the year.

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