Portugal Telecom (PT) has announced that its shareholders have voted to accept the revised terms of a merger with Brazilian telecoms company Oi SA (Oi), under which PT will have a smaller stake in their new joint company CorpCo. In July Rioforte Investments, a holding company owned by PT shareholder Espirito Santo, failed to pay EUR847 million (USD1.2 billion) of short-term debt, resulting in the Portuguese company having to accept less favourable terms in the merger with Oi. PT will now own a 25.6% stake in the combined entity CorpCo (compared to 39.6% under the original arrangement announced in October 2013), but it has a call option to buy back more shares in Oi if it can recover some of the money from Rioforte.
In October last year PT and Oi announced they would combine operations to form a new Brazil-based company in order to strengthen the Brazilian firm and simplify its ownership structure, while also helping to shore up PT’s operations in its domestic market. The combined entity will have more than 100 million subscribers with annual revenues of around USD19 billion. The development comes amid speculation that America Movil (AM), the Mexican telecoms group controlled by Carlos Slim, is planning to hold talks with Oi concerning a possible joint bid for fellow operator TIM Participacoes (See separate CommsUpdate story for full details).