The way may have been cleared for Spain’s Telefonica to take control of Portugal Telecom’s stake in Brazil’s largest mobile phone company Vivo.
That is because the European Court of Justice has ruled that the Portuguese government’s so called ‘golden share’ in Portugal Telecom breaches EU regulations on the free movement of capital.
The European Commission President José Manuel Barroso was delighted. He said: “It confirms that the position of the European Commission was the right one. Except in very, very limited and exceptional cases, the golden shares are in fact against the internal market.”
Telefonica’s 7.15 billion euro bid to buy Portugal Telecom’s stake in Vivo was accepted by PT’s shareholders but blocked by Lisbon which used the gold share.
The EU’s highest court did not say whether its ruling was retroactive, leaving the fate of Telefonica’s bid uncertain for now.
But telecoms industry analysts said they expected it will now proceed as Portugal has said it will comply with the decision.
Telefonica and Portugal Telecom share ownership of Vivo, but the Spanish firm wants to take full control to boost its profits from Latin America as domestic sales wilt.
Vivo is PT’s only significant overseas asset and its sale would relegate PT to the status of a largely domestic carrier.