Two informed sources revealed that Brazilian telecommunications operator TIM is in talks to repurchase a 51% stake in its previously controlled fiber optic network business, a deal valued at approximately $170 million.

TIM, which is controlled by Telecom Italia, had sold this stake in I-Systems (then named Fiber Co) to the independent communications infrastructure company IHS Towers back in 2021.

Over the past decade, global telecom operators have been actively spinning off their communications tower and fiber optic network assets, aiming to free up capital while sharing the enormous investment costs required for infrastructure expansion.

However, IHS Towers, like other neutral fiber operators in Brazil, has struggled to accumulate a sufficient customer base to establish an independent operational model for I-Systems, hindering its development.

The two sources, who requested anonymity due to the private nature of the negotiations, indicated that the stake under discussion is valued at around 900 million reais (equivalent to $171.05 million). Upon completion of the repurchase, TIM Brasil would gain full operational control of the fiber optic business.

TIM could approve the transaction as early as February 10th.

The sources stated that Telecom Italia last month authorized TIM, in which it holds a 67% stake, to proceed with the repurchase negotiations and has appointed Rothschild & Co as the financial advisor for the deal.

They mentioned that TIM's board might approve the potential transaction during its full-year earnings meeting, which could occur as early as February 10th, but also cautioned that the negotiation process could take longer.

Currently, spokespersons for TIM, Telecom Italia, and Rothschild have all declined to comment, while IHS Towers has not yet responded to requests for comment.

TIM's move to repurchase the I-Systems stake from IHS Towers mirrors the action of its competitor Telefonica Brasil SA (Vivo) - Vivo regained full ownership of the Brazilian fiber company last year, a fiber joint venture originally established by Vivo in 2020.

According to information on I-Systems' official website, the company's operations cover 41 cities in Brazil, with its fiber network reaching a potential 9.3 million households.

Under the current joint venture structure, I-Systems builds new fiber optic infrastructure for TIM and is responsible for its operation and maintenance, while TIM acts as the anchor tenant under a long-term master service agreement.