Telefonica to acquire Brazil’s largest cell phone company Vivo after new deal with PT

Telefonica to buy Brazil’s Vivo after deal with PT

MADRID — Spain’s Telefonica says it will acquire control of Brazil’s largest cell phone operator, Vivo, in a newly sweetened euro7.5 billion ($9.77 billion) deal with Portugal Telecom.

Telefonica and PT both said Wednesday that their boards had approved the transaction, which has been in the works for months and was initially vetoed by the Portuguese government.

The Spanish telecoms company has agreed to buy PT’s 50 percent stake in Brasilcel, a Dutch holding company which in turn owns 60 percent of Vivo. Telefonica already owns the other half of Brasilcel.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

MADRID (AP) — Telefonica said Wednesday it has reached an initial agreement with Portugal Telecom to acquire a controlling share in Vivo, Brazil’s largest cell phone company, for a reported euro7.5 billion ($9.77 billion).

In a statement to market regulators, Telefonica gave no figures but the newspaper El Pais says the company has agreed to pay PT euro7.5 billion for its 50 percent stake in Brasilcel, a Dutch holding company which in turn owns 60 percent of Vivo. Telefonica already owns the other half of Brasilcel.

That amount is euro350 million more than Telefonica’s last offer to PT. PT’s shareholders accepted it in late June, but the Portuguese government blocked the deal by exercising special voting rights. The European Union’s Court of Justice then ruled the government’s blocking of the deal was illegal.

El Pais said the new deal has the blessing of the Portuguese government.

The Telefonica and PT boards will meet Wednesday to vote on the new transaction, Telefonica said.

Telefonica is eager to expand its significant presence in the fast-growing Latin American sector, where it has an important foothold in burgeoning markets such as Chile, Colombia, Mexico, Peru, Venezuela and Brazil.

Brazil’s economy is booming, in contrast to Telefonica’s home territory of Spain which is struggling to emerge from nearly two years of recession.

PT is Portugal’s largest telecommunications operator and the Portuguese government demanded it maintain a foothold in Brazil as it did not want to lose PT’s Brazilian revenue stream.