EXPECTED INCORPORATION OF BRAZIL TELECOM´S MOBILE ACTIVITIES INTO TIM BRASIL
BRASIL TELECOM-TIM BRASIL AGREEMENT STRENGTHENS BRAZIL´S COMPETITIVE FRAMEWORK IN THE TELECOMMUNICATIONS SECTOR
THE AGREEMENT MEETS THE REQUIREMENTS OF THE BRAZILIAN TELECOMMUNICATIONS AUTHORITY (ANATEL) AIMED AT RESOLVING THE ISSUE OF THE OVERLAPPING MOBILE AND LONG-DISTANCE LICENSES OF THE TWO GROUPS CONCERNED.
TELECOM ITALIA REGAINS ITS RIGHTS - TEMPORARILY SUSPENDED SINCE AUGUST 2002 - WITHIN THE CONTROL GROUP OF BRASIL TELECOM, RESUMING ITS ROLE IN THE MANAGEMENT OF THE COMPANY OPERATIONS
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TELECOM ITALIA AGREES TO BUY OPPORTUNITY´S INTERESTS IN BRASIL TELECOM. THE CLOSING WILL BE IMPLEMENTED EITHER AT THE REACHING OF AN AGREEMENT WITH OTHER SHAREHOLDERS IN OPPORTUNITY ZAIN OR IN 24 MONTHS AT THE LATEST
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AGREEMENT REACHED TO SETTLE DISPUTES WITH OPPORTUNITY
Milan, 28 April 2005 - Telecom Italia, through its subsidiary TIM Brasil, and Brasil Telecom today reached an important industrial agreement of strategic significance for both parties.
The agreement will allow the Telecom Italia Group to achieve significant economies of scale, better exploiting the synergies resulting from the integration of the fixed and mobile platforms. The process of network integration launched in Italy will form the basis for its successful transfer to Brazil and will allow further value creation for all shareholders.
In particular, the agreement, which entails a series of measures requiring the approval of the relevant Brazilian authorities, calls for:
• The transfer, through incorporation, of the activities of Brasil Telecom Celular (BRTC), a company 100%-controlled by Brasil Telecom and operating in Region 2 (which includes 9 states in Southern and Central-Eastern Brazil), to TIM Brasil;
• The development of commercial and marketing activities, combining the two groups´ technological know-how, services and distribution networks;
• The enhancement of the two companies´ licenses and infrastructures through the elimination of existing overlaps. In particular:
o TIM Brasil will relinquish its long distance license and will avail itself of the transport services of Brasil Telecom.
o Brasil Telecom, in exiting the mobile business, will place its sites and infrastructure at the disposal of TIM Brasil, thus accelerating plans for the development of network coverage.
The agreement between Brasil Telecom and TIM Brasil strengthens Brazil´s competitive framework in the telecommunications sector.
The agreement also meets the requirements of the Brazilian Telecommunications Authority (ANATEL) aimed at resolving the issue of the overlapping mobile and long-distance licenses of the two groups concerned.
Furthermore, Telecom Italia regains its rights – temporarily suspended since August 2002 – within the control group of Brasil Telecom, resuming its role in the management of the company operations.
These agreements will allow the Telecom Italia Group to enhance, coherently with the targets of its industrial plan, the development strategy for its Brazilian activities as the excellence forehead of the Group´s international presence.
The restoration of Telecom Italia International´s shareholder position in Solpart; the recovery of and the unchallengeable exercise of its governance rights, as attributed in the relative shareholder pact; the strength of the industrial agreement between TIM Brasil and Brasil Telecom, better positions the Telecom Italia Group to develop synergies between fixed and mobile platforms in such a rapidly expanding market.
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Telecom Italia has agreed to buy Opportunity´s interests in the chain of control of Brasil Telecom.
At the same time, Telecom Italia and Opportunity have reached an agreement to settle existing legal challenges and disputes, mainly resulting from the above-mentioned license overlaps.
The deal entails a payment by Telecom Italia of 341 million euro. Out of the total, 50 millino euro will be paid for settling the disputes and 291 million euro for the acquisition of Opportunity´s interests. The acquisition of Opportunity´s stakes will be finalized either when an agreement is reached with other shareholders in Opportunity Zain or in 24 months at the latest.
Milan, 28 April 2005