Saying that it is a strategic holding, Portuguese Prime Minister Jose Socrates has blocked the sale of Portugal Telecom’s stake in the Brazilian mobile phone operator Vivo.
Spain’s Telefonica jointly owns Vivo with Portugal Telecom (PT) and has offered to buy it out.
Lisbon used its so-called ‘golden share’ in PT to veto that even as nearly three quarters of Portugal Telecom’s shareholders voted to go ahead with the sale.
On Tuesday, Telefonica raised its offer to 7.15 billion euros.
Portugal Telecom has said selling its venture in Brazil – which is its only significant overseas market – would “amputate” its future.
There are now likely to be challenges to the veto in the courts and from European Union authorities.