EU Likely To Charge Lisbon On Portugal Telecom Veto Power

BRUSSELS -(Dow Jones)- The European Commission Tuesday is likely to take legal steps against Lisbon for its "golden share" in Portugal Telecom, a commission official said.

A golden share allows the Portuguese government to block takeover bids for the former state-owned monopoly. The process to privatize Portugal Telecomstarted in 1994, but the government still owns 500 shares with extended voting rights.

The government's golden share arrangement has been in the spotlight since February, when Portuguese conglomerate Sonae SGPS SA launched a EUR11.1 billion ($13.4 billion) bid for the country's largest telecommunications operator. Portugal Telecom's board rejected the offer, saying it undervalues the company.

The European Commission previously has taken legal action against other countries for golden share arrangements. In November, it forced Spain to abandon its golden shares in companies privatized in the 1980s and '90s, including telecommunications giant Telefonica SA (TEF).

-By Adam Cohen, Dow Jones Newswires; +322 741 1486; adam.cohen@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 3rd April 2006