Telecom Italia CEO Marco Patuano revealed this week he will review his company’s strategy in Brazil, a country in the grip of recession and political turmoil.
"For our Brazil unit, we are focused at the moment on organic investments but we need to review the strategic plan since the situation in Brazil has worsened a lot," said Patuano, in a report by Bloomberg on Monday.
Telecom Italia announced in February plans to spend more than 14 billion reais (€4 billion) in Brazil over the next three years. The funds will be used to extend 4G coverage to more than 15,000 cell sites, and 3G coverage to more than 14,000 cell sites.
Judging by Patuano’s comments this week though, the Italian incumbent did not at that time expect the situation in Brazil to deteriorate to the extent that it has.
Earlier this month, Standard & Poor’s cut Brazil’s credit rating to junk status. In August, the country confirmed it had entered a recession after the economy contracted by 1.9% between April and June.
In addition, the Brazilian government has been rocked by a corruption scandal at state-owned oil giant Petrobas.
There has been widespread speculation about the potential for consolidation in Brazil, with Telecom Italia’s TIM Brasil unit the player most likely to be acquired. However, declining investor confidence in Brazil may stymie any major M&A activity.
