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Oi–Portugal Telecom merger approved by Brazil's antitrust council

Criado em 15/01/14 16h50 e atualizado em 15/01/14 16h58
Por Daniel Lima Fonte:Agência Brasil

Brasília – The Administrative Council for Economic Protection (“CADE”), Brazil's antitrust regulator housed under the Ministry of Justice, has fully approved a merger between Portugal Telecom and Oi, a Brazilian mobile network operator. Under the name of CorpCo, it will handle the two companies' operations in Brazil and other Portuguese-speaking countries worldwide.

The merger was deemed consistent with fair competition standards in Brazil under the conditions considered by the council. However, Portugal Telecom had to sell its existing interest in another Brazilian carrier, Vivo.

The strategic partnership dates back to 2011, when Oi and Portugal Telecom signed a sale and purchase agreement announced in July 2010 whereby Portugal Telecom would invest $3.5 billion to have a 22.4% stake in Oi, which was planning to buy up to 10% of Portugal Telecom's shares.

According to Oi's spokesperson, Portugal Telecom would acquire interest in the Brazilian company through direct and indirect share purchases and by buying stakes in holding companies. The deal was intended to raise $5 billion to increase Oi's investment potential.

In an official statement, Oi said that “the operation will raise its capital, strengthen its operations and competitiveness, and step up investments in Brazil with a focus on broadband and mobile telephony, thereby increasing its economic value.”

In 2010, the National Telecommunications Agency (Anatel) unanimously authorized Portugal Telecom to acquire interest in Oi, provided that both of them settled their debts to the Telecommunications Inspection Fund (Fistel), as explained in a statement by Anatel: “What this actually means is, the two companies can only complete the transaction after settling all their debts to Fistel, which includes overdue fines arising from completed administrative proceedings.”

The debt amount was reported at around $31 million. “While there are no pending regulatory or competitive issues with the acquisition, Portugal Telecom can only buy a controlling stake in Oi after clearing their tax liabilities.”

João Rezende, a board member at Anatel, went on to explain that since the purchase was high as 22.4% of the shares and Portugal Telecom would be a new shareholder, Anatel would have to endorse the transaction: “This 22.4% stake will give it direct and indirect interest in Oi.”

Edited by Denise Griesinger / Lícia Marques
Translated by Mayra Borges

Creative Commons - CC BY 3.0

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