Portuguese government blocks Telefonica bid

Michael Carroll | July 01, 2010

telecomseurope.net

Telefonica won the battle to buy Portugal Telecom’s stake in joint venture Brasilcel yesterday, but still lost the war as the Portuguese government vetoed the deal at the eleventh hour.

The government used its ‘golden share’ to block the sale of Portugal Telecom’s 50% stake in Brasilcel, despite 73.9% of Portugal Telecom shareholders voting to accept Telefonica’s €7.15 billion offer in an EGM yesterday.

Portugal’s government holds 500 class A shares in Portugal Telecom, and has the right to block share sales to prevent a hostile takeover of the telco.

It cast its vote after the main meeting, claiming the sale was not in Portugal’s national interests WSJ.com reports.

In an ironic twist, the European Court of Justice is due to deliver a ruling on the legality of the golden share on July 8, Reuters reported.

If the court decides the share is anti-competitive, it could clear Telefonica to mount a legal challenge against the government interference.

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