Brazilian regulator Anatel has approved a Telefónica SA (NYSE: TEF)-led consortium's bid for a 23.6 percent stake in Telecom Italia (TIM) . That will make the consortium the largest shareholder of the Italian operator. (See Telefónica Takes Stake in Telecom Italia.)

Sources close to the situation tell Light Reading that Anatel's approval is considered to be the final hurdle for the consortium and that contracts are likely to be signed in the coming days to finalize the transaction, which is valued at €4.1 billion ($5.8 billion). (See Olimpia Sale Agreed.)

In April, a consortium led by Telefónica agreed to buy 100 percent of holding company Olimpia, which had an 18 percent stake in Telecom Italia. The other consortium members are Italian insurance company Generali, Italian banks Mediobanca and Intesa Sanpaolo, and Italian retailer Benetton. The consortium will combine Olimpia's 18 percent indirect stake in Telecom Italia with a direct stake of 5.6 percent already owned by consortium members for total control of 23.6 percent of Telecom Italia. (See Consortium Buys TI Stake.)

The net result for Telefónica is that it will have a 10 percent indirect stake in its Italian national rival Telecom Italia. To gain that indirect stake, the Spanish operator has invested €2.3 billion ($3.3 billion) for a 42.3 percent stake in the consortium

Telefónica has been waiting for the Brazilian regulator's approval of the deal and it finally arrived yesterday with a list of 28 conditions. The reason why Brazil played such a critical role in this acquisition is that Telefónica and Telecom Italia control the top two mobile operators in the country and together make up more than 50 percent of the Brazilian cellular market.

Anatel said that Vivo Participacoes SA , which is a 50-50 joint venture between Telefónica and Portugal Telecom SGPS SA (NYSE: PT), and TIM Participacoes S.A. , which is Telecom Italia's Brazilian mobile operator, must remain as independent companies. Also, Telefónica is not allowed to participate in Telecom Italia board meetings when the Brazilian operation is being discussed. (See TI Stake Buy Delayed.)

One analyst says Telefónica is paying too much for too little with this stake and hopes the transaction will one day lead to the Spanish operator taking a bigger stake in Telecom Italia.

"From the [Telefónica] perspective the transaction is defensive, expensive and achieves relatively little influence," writes the analyst team at Dresdner Kleinwort in a research note today. "Given such discomfort, we watch closely for signs that [Telefónica] has more 'amore' for TI than a standard industrial partnership would warrant."

The analysts add: "The question remains whether [Telefónica's] conquistadorean [Ed. note: No, that's not a real word.] longing for all of TI has been rekindled... We watch for further developments on this front especially should the Italian political arena become less opposed to foreign control over TI."

The highly charged political issue of foreign control of the national Italian phone company has played a big part in the Olimpia sale saga since it began in the spring. AT&T Inc. (NYSE: T), which for a while was the bidder to beat for the Olimpia stake, withdrew its offer due to concerns about possible regulatory difficulties. (See Telecom Italia: Mama Mia! and The Latest Italian Job.)

The upheaval in the ownership structure of Telecom Italia, and the potential to invest in the Italian operator, has drawn attention of many tier one operators, including AT&T, Deutsche Telekom AG (NYSE: DT), Orange (NYSE: FTE), and even Teléfonos de México (Telmex) and Latin Amerian operator América Móvil S.A. de C.V. . (See AT&T Looks at TI, AT&T Closes In on Telecom Italia Stake, Telmex Looks at Olimpia, AT&T Abandons Italian Bid, and AT&T Drops Idea.)

The Brazilian regulator's decisions looks like the end of the ownership saga for Telecom Italia. The Italian press is reporting that Telecom Italia's CEO Riccardo Ruggiero and deputy chairman Carlo Buora will resign today or tomorrow to signify the change in ownership.

— Michelle Donegan, European Editor, Light Reading