Portugal defends Telefonica veto

Portugal’s prime minister has defended the government’s decision to block the sale of Portugal Telecom’s stake in Brasilcel to Spanish rival Telefonica.

Jose Socrates said the government’s use of its golden share in Portugal Telecom was not illegal and had not harmed anyone’s rights, during an interview with Spanish daily El Pais.

He said Telefonica was aware of the government’s position when it bid for Portugal Telecom’s stake in the Brazilian joint venture, which holds a controlling share in local wireless carrier Vivo, and said the Spanish telco should have shown “common sense,” in its negotiations with Portugal Telecom.

“We are defending our interests and we are entitled to it. There has been no violation of any rule or law,” Socrates told the daily.

Telefonica’s €7.15 billion offer was accepted by the majority of Portugal Telecom shareholders at an EGM last week, but was vetoed by Portugal’s government, which claimed the sale wasn’t in the national interest.

The government holds 500 class-A shares in Portugal Telecom, and has the right to block deals to prevent a hostile take-over of the telco.

However, questions were raised about whether the golden share should apply to the Telefonica bid.

The European Court of Justice is due to rule on the legality of the share this week, however Socrates says it has no rights to interfere in state matters.

Portugal Telecom on Sunday denied reports it has held talks with Brazilian operator Oi regarding a merger or acquisition, stating in a regulatory filing that it “is not specifically studying any concrete acquisition or merger in the Brazilian market.”

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