Portugal loses PT ‘golden share’ case

9 Jul 2010

The controversial ‘golden share’ in Portugal Telecom (PT) that was used by the Portuguese government to block PT’s sale of its 50% stake in Brazilian cellco Vivo has been ruled unlawful by the European Court of Justice (ECJ) yesterday. The decision is expected to boost Telefonica’s attempt to buy PT out of Vivo.

The ruling by the ECJ came just hours after the Spanish telecoms firm and PT agreed to ‘look for possible solutions’ to resolve their bitter dispute. The ECJ ruled that the ‘golden share’ gives Portugal an unjustified influence over decision-making at the PT, something that would discourage investment. The court rejected Portuguese arguments seeking to maintain the special rights at Portugal Telecom.

Lisbon used special rights tied to its ownership of 500 ‘class A’ PT shares to block Telefonica’s EUR7.15 billion (USD9 billion) bid for PT’s 50% stake in Vivo, Brazil’s largest wireless operator, by subscribers. The government’s move came after 74% of PT shareholders accepted Telefonica’s offer to buy Vivo.

If Portugal fails to comply with the decision, the European Commission has the option of suing the countryl for damages at the EU court, which could potentially delay any purchase by at least two years. Government minister Pedro Silva Pereira, said that his country respected the court’s ruling, and would: ‘seek solutions that were in full compliance with Community law and that also defend the country’s national interests’.

Portugal,PT Portugal (MEO),

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