Oi SA (OIBR3.SA), Brazil's most indebted phone carrier, has started talks with the controlling shareholder of rival TIM Participações SA over a merger, with discussions initially focusing on governance issues, two sources with direct knowledge of the matter said on Thursday.

The board of Telecom Italia SpA (TLIT.MI), which controls TIM (TIMP3.SA), and Oi Chief Executive Officer Bayard Gontijo are leading the talks, which are also centering on possible changes in Brazilian telecommunications industry rules that could favor a tie-up, said the sources, who requested anonymity to discuss the issue freely.

via www.reuters.com