Brazil's TIM Participações SA (TIMP3.SA) has hired Banco Bradesco SA's (BBDC4.SA) investment banking unit to analyze a potential bid for rival Grupo Oi SA (OIBR3.SA), a source with knowledge of the situation told Reuters on Friday.

Telecom Italia SpA (TLIT.MI), TIM's controlling shareholder, would use TIM as a vehicle to add all or part of Oi's assets in an eventual purchase, said the source, who requested anonymity because the bid is private. TIM and Bradesco declined to comment.

Bradesco acted as one of TIM's advisers in its failed bid for GVT SA, the Brazilian broadband provider acquired by Spain's Telefonica SA (TEF.MC) a few weeks ago. TIM's hiring of Bradesco was first reported by Bloomberg News on Friday.

The acquisition of Oi would allow Telecom Italia to strengthen its position in Brazil's highly competitive telecommunications market, which faces imminent consolidation efforts amid a slowing economy and declining profitability.

A second source familiar with the situation said control of Oi could allow TIM to become Brazil's No. 1 integrated telecom operator. "It's the right thing to look around, but it's easier said than done," said the source, who asked not to be identified because of the sensitivity of the issue.

Shares of TIM rose 0.2 percent to 12.50 reais in late trading on Friday. Preferred shares of Oi rose 4.5 percent to 1.63 reais.

FROM PREDATOR TO PREY?

HSBC Securities analyst Luigi Minerva said TIM appears strategically weaker than integrated players like Oi, Telefonica and America Movil SAB de CV (AMXL.MX) since it lacks TV and fixed-line phone offerings to sell combined service packages.

It may be too early to say whether Oi, which last month hired Grupo BTG Pactual SA (BBTG11.SA) to analyze a possible joint bid for TIM with America Movil, could go from predator to prey, Minerva and other analysts said.

BTG Pactual wants to include Telefonica in a joint bid for TIM, but Telefonica is focused on the newly acquired GVT, a source with direct knowledge of the plans told Reuters last month.

In addition, any bidder for Oi faces the company's debt load of almost $19 billion. Currently, TIM's net debt is equivalent to about 0.2 times earnings before interest, tax, depreciation and amortization.

"It's clear that TIM needs to evaluate Oi's financial situation carefully. Again, it's a question of price," the second source noted.