Oi CEO resigns as rumours swirl over Altice interest in Portugal Telecom

Oi CEO Zeinal Bava has resigned in a move that some see as the first step towards the possible breakup of the merger between the Brazilian operator and Portugal Telecom that was due to complete this quarter.

 SFR, Altice, Bouygues, Orange, Vivendi

Altice founder Patrick Drahi
Copyright: Aude de Cazenove REA

Bava's resignation comes amid rumours that Altice, the telecoms and cable holding group owned by billionaire Patrick Drahi, is interested in buying Portugal Telecom.

Bloomberg reported earlier this week that Altice was aiming to reach an agreement on the Portuguese assets within weeks. Altice did not comment directly on the reports, but noted in a statement emailed to FierceWireless:Europe that as a long-term investor, Altice is looking carefully all opportunities in every countries where the group is present. "Portugal is one of them since the acquisition of Cabovisao (2012) and ONI (2013)," the company added

Any deal relating to Portugal Telecom would have to be agreed by Oi, which controls the merged entity.

"Bava was a huge force in this merger," Ari Lopes, analyst at telecommunications consultancy Ovum, told Reuters. "The thing to watch now is who will replace him." If the new CEO is not a previous Portugal Telecom executive, "it could pave the way for this merger to be undone," Lopes added.

Oi CFO Bayard Gontijo will take on the role of CEO in the meantime, until a successor has been found.

Responding to the reports that it plans to sell Portugal Telecom and concentrate on its Brazilian assets, Oi said no decision had been made regarding the sale of its assets in Portugal, nor has it received any such offers.

To be sure, the merger between Oi and Portugal Telecom--which has now been going on for a year--has been far from smooth: less than three months ago, Portugal Telecom was forced to absorb €897 million ($1.1 billion) in debt from Rioforte, a unit of Espirito Santo International SA.

In August, Henrique Granadeiro, the CEO of Portugal Telecom, resigned following this series of missteps that forced the operator to lower its share of CorpCo, the entity that will be created through the merger with Oi.

The Portuguese operator had to accept a lower stake in CorpCo after the terms of the merger were revised following the non-repayment of the debt issued by Rioforte. Oi has previously criticised PT for not disclosing this investment in advance of a capital raising exercise that was completed in May, in which PT participated.

The merger is scheduled to be completed in the current quarter, and Bloomberg noted that the Portuguese carrier has transferred its local assets to Oi. Portugal Telecom SGPS' main asset now is a minority stake in the enlarged Oi, Bloomberg added.

For its part, Oi is under considerable pressure in its home market of Brazil following Telefónica's agreement to buy broadband provider GVT from Vivendi. Telefónica already competes on the mobile market under the Vivo brand.

Oi recently hired a bank to study the possibility of buying Telecom Italia's stake in TIM Brasil, while TIM Brasil in turn is reportedly interested in buying Oi, although Telecom Italia has denied it is involved in any talks.

For more:
- see this Bloomberg article
- see this Reuters article
- see this Oi statement on the PT sale rumours
- see this Oi statement on the resignation of CEO Zeinal Bava
- see this earlier Bloomberg article

Related Articles:
Telefónica seals deal to acquire GVT from Vivendi
Report: Telecom Italia values TIM Brasil stake at €13B
Reports: Telefónica, Telecom Italia prepare GVT bidding war, as Oi eyes TIM Brasil
Portugal Telecom CEO steps down after debt deal that went wrong
Portugal Telecom to have smaller share in CorpCo under revised deal with Oi

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