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NEW YORK (TheStreet) -- Shares of TIM Participacoes (TSU) - Get TIM Participações SA Report were gaining 6.8% to $23.73 Wednesday following a report that Oi (OIBR) , America Movil's (AMX) - Get America Movil SAB de CV ReportClaro, and Telefonica (TEF) - Get Telefónica SA Report are planning to make a joint bid for the Brazilian wireless carrier.

The joint bid from the three companies would value TIM at about $15 billion, according to Bloomberg. The bid for TIM Participacoes would be made by Grupo BTG Pactual which would act as a financial vehicle and then split the company in three.

Oi would reportedly gain own 25% of TIM, with Claro and Telefonica dividing the other 75% between them.

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TIM parent company Telecom Italia believes the Brazilian company should be valued at 20 billion euros ($25 billion) or more, according to Bloomberg. The Italian carrier recently received authorization from its board of directors to explore a merger between TIM and Oi.

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TheStreet Recommends

TheStreet Ratings team rates TIM PARTICIPACOES SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIM PARTICIPACOES SA (TSU) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for TIM PARTICIPACOES SA is rather high; currently it is at 59.95%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TSU's net profit margin of 6.98% significantly trails the industry average.
  • The revenue fell significantly faster than the industry average of 58.8%. Since the same quarter one year prior, revenues fell by 31.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $695.19 million or 27.37% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, TIM PARTICIPACOES SA has marginally lower results.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Wireless Telecommunication Services industry. The net income has decreased by 22.5% when compared to the same quarter one year ago, dropping from $140.28 million to $108.70 million.
  • You can view the full analysis from the report here: TSU Ratings Report

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