Brazil is likely to approve investment in Telecom Italia.(BRAZIL)

Latin America Telecom, September, 2007

Shares of Telecom Italia and Pirelli increased amidst expectations that BrazilEs telecommunications watchdog Anatel will allow new investors to acquire a dominant stake in the Italy based telecom group.

Some Italian investors as well as Spainbased Telefonica had agreed to buy a 23.6 percent controlling stake of Telecom Italia for $6.96 billion in April. Pirelli owns a controlling stake in Telecom Italia.

However, approval form Anatel is necessary, as Telefonica as well as Telecom Italia have huge stakes in BrazilEs mobile operators. If this deal gets approval from Anatel, it is likely to be closed within a few days. The regulator is taking its own time since this deal would affect the countryEs market. Telecom Italia owns 50 percent of Vivo, the largest mobile operator in Brazil, in partnership with Portugal Telecom. TIM, the mobile unit of Telecom Italia, also operates in the nation. Vivo owns 28 percent of BrazilEs market, while TIM owns nearly 26 percent. Telefonica will pay $3.13 billion in this deal, which will provide it with 10 percent of Telecom Italia.