Tim Surges as Telefonica Boosts Stake in Parent: Sao Paulo Mover

Tim Participacoes SA, Brazil’s second-biggest mobile carrier by market share, rallied to a two-year high as speculation mounted that its parent company will sell the unit as part of a plan to reduce debt.

The company’s shares gained 9.6 percent to 11.08 reais at the close in Sao Paulo after Telefonica SA said in a statement that it agreed to pay $596 million to increase its stake in Telecom Italia SpA, which controls Tim, to 66 percent from 46 percent.

Telefonica’s expanded influence over the Italian phone company, which is looking for capital to pare more than $38 billion in net debt, fueled speculation that a sale of Tim could be part of the plan.

“Investors now are waiting for news on a deal,” Sandro Fernandes, a trader at brokerage Geraldo Correa, said in a phone interview from Belo Horizonte, Brazil. Telecom Italia could sell a stake in Tim to another international carrier, or Tim could merge with a Brazilian rival, he said.

The stock was the best performer today on the Ibovespa benchmark. Oi SA, Brazil’s fourth biggest cell phone operator, was the second best gainer with a 5.1 percent advance to 5.15 reais. Telefonica Brasil SA, known as Vivo, added 3.6 percent to 51.50 reais.

Press officials for Tim in Rio de Janeiro declined to comment. Telecom Italia’s and Telefonica’s press offices didn’t immediately respond to e-mail messages from Bloomberg News seeking comment.

Tim is Brazil’s fastest-growing mobile phone operator with a 27 percent market share as of July, behind Telefonica Brasil’s Vivo brand with 29 percent, according to data compiled by consulting group Teleco.

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