Portugal Telecom has agreed to sell its 50 percent stake in Brasilcel, the company that controls 60 percent of Brazilian mobile operator Vivo, to Telefonica, giving the Spanish operator full control of the company. Telefonica will pay EUR 7.5 billion for PT's stake, better than its last offer of EUR 7.15 billion which was vetoed by the Portuguese government. PT will receive EUR 4.5 billion at closing, expected within 60 days, EUR 1 billion on 30 December 2010, and EUR 2 billion no later than 31 October 2011. The last payment will be reduced by EUR 25 million if PT exercises an option for payment in July 2011. Telefonica and PT also agreed to start talks early next year on an industrial partnership, covering areas such as procurement, technology, joint provision of services to international clients, roaming and R&D. Furthermore Telefonica will consider acquiring PT's contact centre unit in Brazil, Dedic. At the same time, PT announced an agreement to acquire a 22.38 percent stake in Brazilian operator Oi for up to BRL 8.4 billion. The deal sees PT swap a stake in the leading mobile operator in Brazil for a participation in integrated operator Oi, which is ranked fourth on the Brazil mobile market and also has the largest fixed-line operations across the country following its merger with Brasil Telecom last year. Meanwhile Telefonica will be able to better integrate Vivo with its growing fixed-line business in Brazil.
PT's agreement with the two principal sharehodlers of Oi's holding company Telemar Participacioes (TmarPart) will see the Portuguese company participate in a capital increase; all three have also agreed to maintain their stakes for five years. Telemar will also be able to take an up to 10 percent stake in PT. PT will get special rights to name top management and participate in executive committees at Oi, as well as veto certain decisions at the shareholders meeting. The transaction is structured as follows: PT will buy minority stakes of 35 percent in the two principal shareholders of TmarPart as well as a 10 percent stake in TmarPart; the shareholders of TmarPart, including PT pro rata for its stake, will subscribe to a capital increase of BRL 4.24 billion; TmarPart and other shareholders of the Oi holding company Tele Norte Leste (TNL) will subscriber to a capital increase of BRL 12 billion, with PT taking up any rights not exercised by other shareholders up to BRL 2 billion; and a capital increase at Telemar Norte Leste of BRL 12 billion, subscribed pro rata TNL and the other shareholders and PT taking up to BRL 1.73 billion of any unsubscribed rights. The additional capital raised will be go towards reducing Oi's debt and financing international expansion. Oi and PT aim to expand their alliance worldwide, building on PT's presence in other Portuguese-speaking markets. The deal remains subject to due diligence and regulatory approval.
