Mexico's America Movil SAB, Spain's Telefonica SA and Brazil's Grupo Oi SA agreed to place a bid for and to break up TIM Participações SA (TIMP3.SA), Brazil's second-largest wireless carrier, Folha de S. Paulo reported on Friday without saying how it obtained the information.

According to Folha, the accord between the three companies was not fully finalized, but they agreed in principle to pay 31.5 billion reais ($13.1 billion) for TIM, the Brazilian unit of Telecom Italia SpA. That price would include a 5 percent premium payout to controlling and minority shareholders of TIM, the paper added.

Investment banking firm Grupo BTG Pactual SA (BBTG11.SA) is handling the transaction, Folha added. A formal offer will be placed to shareholders of Telecom Italia (TLIT.MI), which owns about two-thirds of TIM Participações, the paper said.

Breaking up TIM would give rivals more breathing room in Brazil's crowded four-way mobile market, where they have struggled to add customers, invest in high-speed networks and protect profits in a stagnant economy.

Under the deal, America Movil would keep 40 percent of TIM's business, with Oi taking 28 percent and Telefonica about 32 percent, Folha said. According to the newspaper, Telecom Italia proposed to merge TIM Participações with Oi, but the plan did not move forward.

One source with knowledge of the situation told Reuters on Friday that Telefonica (TEF.MC)(VIVT3.SA) had engaged in talks in recent days about breaking up TIM Participações. Telefonica repeatedly said its sole focus was on integrating Brazil's GVT SA, a fixed-line and Internet broadband services firm it bought in August, into its platform.

America Movil (AMXL.MX), which is controlled by Mexican billionaire Carlos Slim, confirmed in September that it planned to join talks with Oi to make a joint bid for TIM.

Oi (OIBR3.SA) and Telefonica declined to comment. Press representatives for America Movil in Brazil did not have an immediate comment. Media representatives for BTG Pactual were not immediately available.