Portugal Telecom to acquire 22 percent stake in Brazil’s operator Oi

Portugal Telecom To Acquire Stake in Oi Brand

Portugal Telecom To Acquire Stake in Oi Brand

Six months after Portugal Telecom SGPS SA exited Brazil’s biggest wireless operator Vivo Participacoes SA, it agreed to buy at least 22 percent in Telemar Norte Leste SA – Brazil’s biggest telephone company, for 8.32 billion Reais ($5 billion).

In a regulatory filing today, both the companies said that after the transaction is completed, Telemar will acquire at least 10 percent in Portugal Telecom. Telemar operates under the brand name Oi brand in Brazil.

“Crucially, uncertainty is removed, which we think makes PT more investable”, said Citigroup analyst Georgios Ierodiaconou in a note. Although Oi gets most of its revenues from wireline business, nonetheless it competes with Vivo in the wireless segment as well.

“Portugal Telecom will continue to benefit from scale and geographic diversification in high-growth markets”, the company said in a statement.

As part of the agreement, Tele Norte Leste – the parent company of Oi, will issue new voting as well as preferential shares worth 12 billion Reais, of which shares worth 1.26 billion Reais will be acquired by Telemar Participacoes SA to retain its control over Tele Norte Leste.

Portugal Telecom will also merge its contact centre business with rival CTX Participacoes SA – which has common shareholders with Telemar Participacoes SA.

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