Spain-based Telefonica said that it was not involved in considering a joint bid for TIM Brasil, the Brazilian wireless network operator of Telecom Italia, Reuters reported. A report which appeared in the Italian press said that Telefonica was looking to establish a vehicle with America Movil and Oi, its competitors in the Brazilian market, that would take over TIM Brasil and then split the company. It propelled the rise of the shares in Telecom Italia.

In a statement to the regulator of the Spanish stock market, the Spain-based telecommunications firm said, "Telefonica would like to clarify that it is not part of any such vehicle and it has no details of any kind on any such potential transaction to disclose to the public for market evaluation." Telefonica also said that it did not have any specific contact with Cade, the Brazilian competition watchdog, about the said transaction.

Telefonica has a 15% stake in Telecom Italia through investment vehicle Telco. It also obtained an option late last year to take over the stakes of its partners in Telco which is comprised of a group of Italian financial firms, the report said.

According to Reuters, the takeover move for Telco is a source of concern for Brazilian regulators because it controls Vivo, a local mobile network carrier. Early in December, Cade ruled that Telefonica must divest the direct and indirect stakes it holds in TIM Brasil or lower its holdings in Vivo. People knowledgeable about the plans of the Spanish group informed Reuters last month that Telefonica regards Vivo as a strategic business.

The sources added that Telefonica planned to split TIM Brasil and distribute its assets and networks between itself and its two competitors. Telefonica also said that it was considering taking legal steps against the Brazilian regulator Cade for proposing what it termed as "unreasonable" remedies.