Telecom Italia

Situation

Telecom Italia and Brasil Telecom (“BT”) had formed a venture to purchase licenses stemming from the privatization of the Brazilian wireless telephone industry and sale of wireless spectrum. Over time, the relationship between BT and TI soured as a result of disputes over direct competition with the venture, issues relating to the control of the venture, and other matters.

Engagement

Gordian Group was retained by the attorneys representing TI in connection with TI’s litigation and arbitration with BT. After TI initiated its arbitration proceedings, Gordian Group was asked to assess damages suffered by TI. The damages assessment was fundamentally based on the damage to TI through the loss of control value of its investment in BT and the deleterious effect of BT’s management after TI ceded control. To determine the control value, Gordian Group reviewed various academic studies on control premiums and analyzed the control premiums that can be observed in merger market transactions. The deleterious effect of BT’s management was examined through a study of the Brazil telecommunications market and included various financial analyses and valuations of BT and other comparable telecommunications firms.

Outcome

TI reached a satisfactory negotiated settlement.