Spain's Telefónica has reached an agreement with Portugal Telecom to take full control of their joint venture, Brazil's largest mobile operator Vivo, Spanish daily El Confidencial reported, citing sources close to the negotiations.
The deal hinges on Portugal Telecom replacing its 50% stake in Vivo with another investment in the Brazil's mobile phone sector, the newspaper said.
Telefónica has made no secret of the fact that it wants to secure control of Vivo. However, when contacted by BNamericas, the Spanish operator would not comment on the story.
In February, PT fended off a hostile US$15.5bn takeover bid from rival Portuguese telecoms company Sonaecom. Sonaecom had previously said it was willing to sell PT's Vivo stake to Telefónica if it were to succeed with its bid.
However, in March Portugal Telecom reaffirmed its commitment to Brazil and even said it had the capacity to take full control of Vivo.
Nonetheless, Thomas Abreu, an analyst with Pyramid Research, is skeptical of the report that Telefónica and Portugal Telecom have already reached an agreement.
They are looking at it from different points of view, with Telefónica wanting to gain full control, while Portugal Telecom wants to keep Vivo, but not full control, Abreu told BNamericas.
"If Portugal Telecom is to sell its stake in Vivo, it will need to be handsomely rewarded," Abreu said.
"Also, now that Vivo's turnaround program is underway, it may not be the best time to sell," he added.
Vivo ended March with the biggest single share of the local market at 28.4% compared to 29.1% at end-December 2006 and 28.6% at the end of February this year, according to data from telecoms regulator Anatel.
Last week, a Vivo shareholders' meeting approved capital investments of 1.73bn reais (US$851mn) for this year. The company invested over 2.1bn reais in 2006, with over 50% going to deploying a GSM overlay on its CDMA network.
If Telefónica does gain control, Vivo may benefit from having a single voice, but the strategy is unlikely to change, Abreu predicted."
Posted to the site on 25th April 2007
Posted to: www.cellular-news.com/story/23373.php