BrT: Merger details await consultants' evaluation

Brazilian telco Brasil Telecom (NYSE: BTM) expects to select an international consultancy within a week to determine the practical details of merging its mobile unit BrT GSM with TIM Brasil, Brasil Telecom (BrT) president and CEO Carla Cico told BNamericas. Key issues to resolve are to what extent BrT GSM's network overlaps with that of TIM, whether BrT will have to return its operating license to the authorities, migration of BrT GSM clients to TIM and how to integrate TIM's long distance operations into BrT. With the consultancy's help BrT will be able to draft a proposal for reconciling BrT and TIM's operations, which would go to the telecoms regulator Anatel for approval, Cico said. The most immediate result of the merger agreement is elimination of what has been a very "unclear environment" which was "not the best situation" for BrT, she said, referring to the ongoing control dispute between Telecom Italia and Opportunity Bank. However, the dispute has not necessarily impinged on Brasil Telecom's operations and it has always managed good operating standards, Cico said. Analysts were quick to highlight the synergies both BrT and TIM will enjoy as a result of the agreement, and Cico does not think the regulatory environment would prevent the firms from exploring them. Telecom Italia has a 19.9% direct stake in BrT and as a result of the mobile unit merger is free to buy Opportunity holdings that would give it a 38% stake in Solpart Participações, which controls BrT parent company Brasil Telecom Participações (NYSE: BRP). The agreed price for Opportunity's stakes is 341mn euros (US$440mn), including 50mn euros to settle court cases. US financial conglomerate Citigroup (NYSE: C) and a group of Brazilian pension funds also have indirect interests in Solpart and according to Brazilian stockbroker Link should be interested in selling these holdings to Telecom Italia for the same price Opportunity received. In that case Telecom Italia would have full control of Solpart and BrT.