The Telecom Italia Group has reached agreement with fellow shareholders in Solpart Participações S.A. (which has indirect control of Brasil Telecom). The Telecom Italia Group is to reduce its own stake in Solpart ordinary share capital from 37.29% to 19%, through a sale of equity to Timepart Participações Ltda and to Techold Participações S.A.
This reduction is required to overcome barriers of a regulatory nature which until now have prevented TIM´s local subsidiaries from commencing GSM 1800 commercialization. The deal brings Telecom Italia’s position into line with Brazilian legal requirements and paves the way for TIM to begin an immediate launch of GSM services.
After this transaction the Telecom Italia Group stake dips below the 20% threshold of Solpart ordinary share capital and as a result Telecom Italia no longer has the right to be involved in control over Brasil Telecom – a factor that has proved to be the impediment to TIM starting up its GSM service in Brazil.
Prior to the deal the Telecom Italia Group owned 37.29% of Solpart’s ordinary shares and 38% of its privileged shares. Effective on signature of contract, the Group is transferring 18.29% of Solpart ordinary shares to Timepart and Techold, for $47,000. This price reflects the value deriving from the market capitalization of Brasil Telecom, Solpart’s only asset. The Telecom Italia Group will therefore continue to hold the privileged capital it already owns, which constitutes the greater part of Solpart’s economic capital.
As soon as is legally possible, the Telecom Italia Group intends to return to its previous investment position. As and when this occurs, the company agreement which is voided by these developments shall be reformulated in such a way as to provide Brasil Telecom management greater flexibility in running the company.
This transaction requires ANATEL regulatory approval. Should this not be forthcoming, the contract shall automatically be rescinded.