People walk in front of the headquarters of the Brazil's largest fixed-line telecoms group Oi in Rio de Janeiro, Brazil.[Photo/Agencies]

SHANGHAI - China's largest phone company is in talks with Brazil's telecom regulator on buying the mobile phone division of Oi SA.

A report by Exame magazine said China Mobile Ltd is keen to take over the telecom company, which is under bankruptcy protection.

China Mobile would not take up overdue fines the carrier owes under the deal it discussed with Agencia Nacional de Telecomunicacoes, or Anatel, Exame stated, without saying where it received the information.

Anatel confirmed it talked about an Oi acquisition with China Mobile and China Development Bank on Sept 11, according to the report.

A deal for Oi, which has about $19 billion in debts, would be the State-owned Chinese carrier's first overseas buyout and would come amid a crackdown by regulators on financing for outbound acquisitions.

Anatel is Oi's largest individual creditor, with $3.5 billion in fines accumulated during Oi's 20 years of operations.

The company, which is the sole phone-services provider in hundreds of Brazilian cities, has failed to present a firm recovery plan to the regulatory agency, which had set a deadline of Aug 23.

China Mobile opened an office in Sao Paulo this month, Exame reported, without saying where it got the information.

An email to Anatel seeking comment outside business hours was not immediately returned. China Mobile did not immediately respond to a request for comment.

After months of delays marked by infighting among shareholders and bondholders, the Brazilian phone carrier is facing intensifying pressure to wrap up a process that has dragged on for more than a year.

The company lost almost six million clients in Brazil in the first year under bankruptcy protection, and CEO Marco Schroeder last month said the group needs a capital boost sooner rather than later.

BLOOMBERG