Bloomberg | January 26, 2011 | Anabela Reis and Joao Lima
Portugal Telecom SGPS SA agreed to buy at least 22 percent of Telemar Norte Leste SA, Brazil’s biggest phone company, for 8.32 billion reais ($5 billion) in cash, six months after selling its stake in the country’s largest wireless operator.
Telemar, which operates under the Oi brand, also plans to buy as much as 10 percent of Portugal Telecom after the transaction is completed, the companies said in regulatory filings today.
“Brazil is a geographical focus for Portugal Telecom,” Zeinal Bava, the Lisbon-based company’s chief executive officer, said in a conference call. “Brazil, Africa and Portugal are the company’s biggest strategic bets.”
Portugal’s biggest phone company is buying a stake in Telemar after selling its stake in Vivo Participacoes SA to Telefonica SA for 7.5 billion euros ($10 billion) in July. Oi gets most of its revenue from wireline service while competing with Vivo in the wireless market. Portugal Telecom wants to replicate the turnaround it performed in Portugal of its own fixed-line business.
Oi will represent more than 50 percent of the Portuguese company’s revenue, Bava said. Vivo provided 48 percent of its revenue in 2009. The investment won’t affect Portugal Telecom’s dividend policy, Bava said.
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