Tim Rises as Oi-Portugal Telecom Deal Boosts Acquisition Outlook

Tim Participacoes SA (TIMP3), Brazil’s second-biggest mobile carrier by market share, climbed to a one-week high on speculation Oi SA will offer to buy the company’s assets after agreeing to merge with Portugal Telecom SGPS SA.

Shares of Tim gained 1 percent to 10.81 reais at 1:46 p.m. in Sao Paulo, the highest level on a closing basis since Sept. 24. The benchmark Ibovespa index added 0.3 percent.

Oi’s plan to raise as much as 4.7 billion euros ($6.4 billion) in capital fueled speculation that some of it may be used to acquire Tim’s assets, according to Marcelo Porto, the chief analyst at the brokerage firm Ativa Corretora. Oi disclosed the merger plan and capital raise in a regulatory filing today.

“That comes some days after rumors that Tim’s parent company is interested in selling the unit to reduce its debt, so a takeover by Oi is a possibility now that the carrier has money to make an offer,” Porto said in a telephone interview from Rio de Janeiro.

Tim, a subsidiary of Telecom Italia SpA (TIT) based in Rio de Janeiro, is Brazil’s fastest-growing mobile phone operator, with a 27 percent market share as of August, according to data compiled by the nation’s telecommunications regulator, Anatel. Tim trails Telefonica Brasil SA’s Vivo service, with a 29 percent stake, while Oi has 19 percent of the market.

Oi rallied 11 percent to 4.70 reais after the merger was announced, the biggest gain on a closing basis since July 22. Telefonica Brasil fell 1.8 percent to 49.20 reais.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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