Portugal Telecom approves sale of country assets
Portugal Telecom SGPS SA shareholders approved the 7.4 billion-euro ($ 8.4 billion) sale of Oi SA's Portuguese telecommunications assets to billionaire Patrick Drahi's Altice SA, paving the way for consolidation in Brazil's phone market.
Portugal Telecom is a minority investor in Oi and its shareholders had the right to block the sale, even though the Portuguese company doesn't control the assets. Brazil's Oi gained the Portuguese assets in a merger with Portugal Telecom.
"Oi is satisfied with the outcome of the vote," Oi Chief Executive Officer Bayard Gontijo told reporters after the investor meeting yesterday in Lisbon. "It's the best thing for both companies.
It's the best thing for PT Portugal, which will continue providing services of excellence in Portugal, and for Oi to reduce its leverage." Oi's American depositary receipts jumped 19 percent in New York trading after the decision.
A clearance of the sale is crucial for more consolidation in Brazilian telecommunications. Oi, Brazil's smallest wireless carrier, needs the proceeds as it evaluates a potential bid for Tim Participacoes SA, the local wireless provider controlled by Telecom Italia SpA. At the same time, Telecom Italia has been studying a acquisition of Oi using Tim, people familiar with the matter have said.
Portugal Telecom climbed 8.6 percent to 86 euro cents at 8:26 a.m. in Lisbon, adding to a 24 percent advance yesterday. Telecom Italia climbed 5.8 percent to 1.03 euros. Oi rose 20 percent to 6.77 reais in Sao Paulo yesterday.
"Approving the sale of PT Portugal to Altice was the best out of the solutions that were on the table," Rafael Mora, vice chairman at Ongoing Investments SGPS SA, told reporters after yesterday's meeting. Ongoing holds a 10 percent stake in Portugal Telecom, according to the phone company's website.
Oi and Portugal Telecom agreed more than a year ago on their combination. In July, the companies renegotiated the deal to give Portugal Telecom a smaller stake in the combined entity after it emerged that the Portuguese company was holding debt defaulted by Grupo Espirito Santo's Rioforte Investments SA.
Telecom Italia's Tim unit has been studying a takeover of Oi to gain market share and compete with Telefonica Brasil SA and America Movil SAB's Claro brand in Brazil.
Any delay with the Portuguese sale would potentially deter Telecom Italia from making an offer, people familiar with the matter have said. That's because Telecom Italia is focused on Brazil and has no any interest in gaining Oi's assets in Portugal, one of the people said.