Brazil prosecutors ask antitrust body to block Oi mobile ops sale (updated)

Telefonica Brasil, SA

07/02/2022 13:57

(Updates with share reaction, analyst comment)
    BRASILIA/SAO PAULO, Feb 7 (Reuters) - Brazil's prosecutor's
office recommended that antitrust regulator Cade block the sale
of Oi SA  OIBR4.SA  mobile operations to local rivals TIM SA
 TIMS3.SA , Telefonica Brasil's Vivo  VIVT4.SA  and Claro, a
subsidiary of Mexico's America Movil  AMXL.MX .
    The move sent shares in Oi - which is under bankruptcy
protection - sharply down in early trading on Monday, while
those of Telefonica's  TEF.MC  Vivo and Telecom Italia's
 TLIT.MI  TIM were also in negative territory.
    Waldir Alves, who represents the prosecutor's office at
Cade, said in a Sunday report the deal should be blocked due to
a "competition violation," also mentioning "potential
exclusionary practices."
    Cade is expected to analyze the matter on Wednesday's
agenda.
    Analysts at Guide Investimentos said the move was negative
for Brazilian telecoms, noting the market had already priced in
the deal.
    "Canceling the deal would drag telecom shares into a
correction," Guide said in a research note.
    Preferred shares in Oi dropped 3.4% to 1.70 reais, while
Telefonica Brasil SA was down 2.35% at 48.54 reais and TIM fell
1%. Brazil's stock index Bovespa  .BVSP  was down 0.1%.
    TIM said in a statement the deal will boost competition,
investments and technology development in the coming years,
adding it will acquire most of Oi's assets.
    The transaction has been under scrutiny since late 2020,
when the three companies won the assets in an auction that was
contested by rivals such as Algar Telecom. They submitted a
joint bid of 16.5 billion reais ($3.12 billion).  urn:newsml:reuters.com:*:nL1N2U81ZC
    The sale was approved by Brazilian telecom regulator Anatel
last week.  urn:newsml:reuters.com:*:nE1N2TY006

($1 = 5.2962 reais)

 (Reporting by Ricardo Brito in Brasilia and Gabriel Araujo in
Sao Paulo;
Editing by Louise Heavens and Bernadette Baum)
 ((Gabriel.Araujo2@thomsonreuters.com; +55 11 5644 7745;))