Portugal Telecom's Talks to Buy Stake in Brazil's Oi Are Said to Advance
Portugal Telecom SGPS SA chief executive officer Zeinal Bava. Photographer: Mario Proenca/Bloomberg
Portugal Telecom SGPS SA may reach an agreement within days to buy a stake in Brazil’s Tele Norte Leste Participacoes SA as talks are advancing, said a person with direct knowledge of the negotiations.
The owners of Tele Norte, also known as Oi, would likely control Brazil’s biggest phone operator under the terms, which are still being discussed, said the person, who declined to be identified because the talks are private.
A deal with Oi may allow Portugal Telecom to sell its stake in its existing Brazilian venture, Brasilcel NV, to Telefonica SA. The Spanish company earlier this month ended a 7.15 billion- euro ($9.3 billion) bid for Brasilcel, turning down a request from Portugal Telecom to extend the offer beyond July 16.
The Portuguese government blocked Telefonica’s offer for Portugal Telecom’s 50 percent stake in Brasilcel because it was concerned the former phone monopoly would be left without a fast-growing asset. Brasilcel controls Vivo Participacoes SA, Brazil’s largest wireless operator.
Spokespeople for Portugal Telecom, Oi and Telefonica declined to comment when contacted by Bloomberg News yesterday.
Carlos Jereissati’s Grupo Jereissati is the only Tele Norte shareholder that opposes the sale of a stake to Portugal Telecom, Exame magazine reported yesterday, without saying where it got the information. Grupo Jereissati is against the deal because the sale of a stake to a foreign investor may diminish the group’s power, the magazine said.
‘Great Potential’
Vivo rose 32 centavos, or 0.7 percent, to 46.32 reais in Sao Paulo trading yesterday. The shares have fallen 15 percent this year, compared with a drop of 2.8 percent for the benchmark Bovespa index. Tele Norte preferred shares climbed 85 centavos, or 2.9 percent, to 30.60 reais in Sao Paulo trading. The stock has fallen 8.7 percent this year.
Portugal Telecom investor Banco Espirito Santo SA said on July 26 that the phone company should invest in Brazil if it sells the Brasilcel stake and that Oi may have “great potential.”
Rio de Janeiro-based Oi provides Internet access, mobile, fixed-line and paid television services. The company on May 14 reported a record first-quarter profit after acquiring its smaller rival Brasil Telecom SA in 2009.
Privately held Telemar Participacoes SA controls Oi’s holding company Tele Norte, which has publicly traded voting and preferred shares. Investors in Telemar Participacoes include AG Telecom, La Fonte Telecom SA and pension fund Fundacao Atlantico de Seguridade Social, according to Oi’s website.
To contact the reporters on this story: Jacqueline Simmons in Paris at jackiem@bloomberg.net; Anabela Reis in Lisbon at areis1@bloomberg.net.
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