Portugal’s government blocks a Spanish bid for a strategic telecoms asset
WATCHING Spain penetrate the Portuguese defence for a 1-0 victory in the World Cup this week was clearly too much to bear. On June 30th, to prevent Spain’s Telefonica seizing full control of Vivo, a valuable Brazilian mobile asset it jointly owns with Portugal Telecom, Portugal’s government used its golden share in the national telecoms operator to block the Spaniards’ attack. For shareholders in Portugal Telecom, the government has now become their archenemy. Just before the shareholder meeting Telefonica had offered a crazily high, revised price of €7.15 billion ($8.77 billion) for Portugal Telecom’s share of Vivo. Of the Portuguese firm’s shareholders who voted, three-quarters had just opted to accept the Spanish bid.
“The government is protecting the interests of the country,” explained Jose Socrates, Portugal’s prime minister. Ever since Telefonica made its first offer of €5.7 billion some weeks ago, Mr Socrates had left no doubt that the government regarded the stake in Vivo as strategic. Portugal Telecom derives 46% of its revenues from the fast-growing Brazilian unit and its future growth depends on it. The government instructed Caixa Geral de Depositos, a state-owned bank, to vote against the sale to Telefonica. But Portugal Telecom’s board told investors this month that the government could not legally block the bid for Vivo using its golden share. “All our lawyers told us this was not possible,” says a person close to the company. …
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