Telefonica bids 7 billion dollars for Portugal Telecom unit

MADRID: Spanish telecommunication giant Telefonica said Tuesday it has offered 5.7 billion euros (7.3 billion dollars) to acquire the 50 per cent of Portugal Telecom unit Brasilcel it does not already own.

Portugal Telecom management quickly rejected the offer.

Brasilcel controls 60 per cent of Brazilian mobile telephone group Vivo Participacoes SA. With control of Brasilcel, Telefonica said it would then bid for a further stake in Vivo, taking the total value of the operation to 6.3 billion euros.

Portugal Telecom described Vivo as an "essential asset" whose sale would not be in PT's best interests.

The Spanish group said its offer would expire June 6.

Telefonica and PT joined forces in 2003 to form Vivo with the intention, they said at the time, of making it "the largest mobile telephone operator in Latin America."

Telefonica said in its offer that Vivo had turned in "exceptionally good performances" and was now the "uncontested leader in the Brazilian mobile phone market."

The Spanish group is already active in Latin America, where a robust economic performance has helped offset weaker, crisis-crippled markets in Europe.

"In an environment of general macroeconomic deterioration on the global level, Latin American economies were stable in 2009, with recovery likely in 2010," Telelefonica commented in February.

Telefonica shares were down 4.11 percent around mid-day on an overall Madrid market that fell more than 4.0 per cent.

In Lisbon, Portugal Telecom shares jumped by around 20 percent on the news but then fell back to show a gain of nearly 9.0 per cent.