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Portugal Telecom, Telefonica mull Brazil deal

Portugal Telecom, Telefonica mull Brazil deal

Portugal Telecom's board extended its deliberations Friday on Telefonica's (EURO)7.15 billion ($9.3 billion) offer for its stake in Brazil's leading cell phone company, Vivo.
The PT board will hold an afternoon meeting for further discussions after its deliberations Thursday produced no decision. The company gave no information about when a decision might be announced.
The Portuguese government says the two companies were assessing a possible deal that would benefit both Iberian companies.
PT's board has said it isn't interested in selling, but PT shareholders voted to accept the bid two weeks ago. The Portuguese government then used its special voting rights to block the sale, citing "national interests."
PT and Telefonica each own 50 percent of Brasilcel, a holding company which owns 60 percent of Vivo. The Spanish company wants to buy PT's half of Brasilcel, and its offer expires at midnight Friday.
Telefonica wants to expand its presence in the fast-growing Latin American market. Brazil's economy is booming, whereas financial gloom in Telefonica's home territory of Spain is stunting the company's growth there.
PT, meanwhile, doesn't want to give up its Brazilian revenue stream.
Analysts reckon the companies are mulling an agreement that will pay dividends for all concerned while addressing the Portuguese government's demand that PT, the country's biggest telecommunications operator, maintain a foothold in Brazil.
A deal could involve Telesp, a fixed-line services operator in Brazil owned by Telefonica. The Spanish company has talked about integrating Vivo's wireless operations into Telesp, thereby saving costs and broadening its customer appeal as a one-stop shop.
"They could certainly merge (their operations) in Brazil, with PT getting a minority stake" in the new company, said Alexandra Delgado, a market analyst at Portuguese bank Millennium bcp.
The negotiations could continue into next week, Delgado said.
Telefonica SA is a much larger company than Portugal Telecom SGPS SA, employing about 237,000 people compared with the around 32,000 employees at its Portuguese counterpart.


Updated : 2020-12-04 11:00 GMT+08:00