November 8, 2017 / 2:15 PM / a year ago

UPDATE 1-Brazil's TIM criticizes China Telecom tactics in Oi bid

(Rewrites throughout to add details on president’s comments, adds share price)

By Gram Slattery

SAO PAULO, Nov 8 (Reuters) - Tim Participações SA , Brazil’s second-largest wireless phone company, expressed concerns on Wednesday about the potential acquisition of debt-laden carrier Oi SA by state-run China Telecom Corp Ltd, adding to criticism already put forth by rival Telefonica Brasil SA.

Speaking to analysts after the release of quarterly results, Stefano de Angelis, the company’s president, said TIM does not like companies pressing preconditions on the government before committing to investments, as China Telecom is currently doing in its bid to acquire Oi.

“We don’t like companies that want to invest in the country, putting conditions on the government for those investments,” de Angelis said.

In October, Telefonica Brasil Chief Executive Eduardo Navarro said that the telecoms firm is concerned about foreign state-run companies such as China Telecom entering Brazil’s telecommunications sector as they would not be responsive to shareholders.

China Telecom and U.S. investment fund TPG Capital Management LP are in talks with the government over a takeover of Oi, which filed for Latin America’s largest ever bankruptcy last year. However, they have told the government they will not invest unless a key telecoms reform is passed and the government renegotiates billions of dollars in unpaid regulatory fines Oi currently owes, local media has reported.

Among the possible strategies of a China Telecom-led Oi, media has reported, would be a tie-up with TIM.

De Angelis said that TIM was not currently considering any tie-up with Oi. He added that the company is not studying a purchase of Cia Energética de Minas Gerais’ telecoms arm, which is currently on the block.

In terms of operations, de Angelis said TIM has significant room to expand its EBITDA margin because of ongoing digitalization efforts and projects to make phone recharging more efficient.

Late on Tuesday, TIM reported third-quarter profit that beat estimates as both pre-paid and post-paid connections picked up pace.

Shares of TIM were up 2.6 percent to 11.75 reais ($3.62) in late morning trading, while Brazil’s benchmark Bovespa index was up about 1 percent. ($1 = 3.25 reais) (Reporting by Gram Slattery; Editing by Chizu Nomiyama and Steve ZOrlofsky)

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