UPDATE 1-Brazil's Cade has not ruled out TIM breakup, source says
BRASILIA, Dec 9 (Reuters) - Brazil's antitrust watchdog Cade has not ruled out the possible division of wireless carrier TIM Participações SA into units to be bought up by local rivals, a government source familiar with the agency's reasoning told Reuters on Monday.
Last week, Cade issued a decision requiring Spain's Telefonica SA to exit its indirect stake in TIM or find a new partner for its own local wireless unit, known as Vivo.
In the ruling, Cade said TIM Brasil, as the local affiliate of Telecom Italia SpA is known, could not be sold entirely to another carrier operating in Brazil. That prohibition would not necessarily hold if TIM Brasil were broken into smaller units, the source said, adding that such a scenario would be evaluated on a case-by-case basis.
That could leave more options open to Telefonica, whose plans to gradually increase its stake in Telecom Italia have been snagged by antitrust concerns in Brazil, where the two companies control over half of the domestic wireless market.
Shares of TIM Brasil fell 0.2 percent to 11.68 reais on Monday. The stock is up 48 percent this year.
Executives at TIM and Telecom Italia have said repeatedly there is no process underway for the sale or breakup of TIM.
Cade has still not concluded whether the Brazilian market would remain competitive enough with three big wireless carriers rather than the current four, according to the source.
"What Cade has said is that it doesn't want a reduction to three companies through one taking over another entirely," said the source.