Portugal Asks State Bank To Vote Against Vivo Stake Sale Bid

Portuguese Prime Minister Jose Socrates said Friday the government has asked state-owned bank Caixa Geral de Depositos to vote against a bid from Telefonica SA (TEF) to buy Portugal Telecom SGPS S/A's (PT) stake in a Brazilian phone company.

PT shareholders will meet next week to vote on Telefonica's EUR6.5 billion offer for PT's stake in mobile phone company Vivo Participacoes SA (VIV, VIVO4.BR). Caixa Geral de Depositos is one of PT's core shareholders, along with Portuguese bank Banco Espirito Santo SA (BES.LB).

Telefonica and PT have been locked in a power struggle over Brazil's coveted telecommunications market, which is key to their future growth prospects. Both companies control Vivo through a 50-50 joint venture in the investment vehicle Brasilcel, which owns 60% of Vivo.

Socrates said in Parliament that Portugal's strategic interest is linked to the dimension and scale of PT.

The Spanish telecoms giant recently decided to sell 8% of PT ahead of next week's shareholder meeting. Citing a conflict of interest, PT officials have hinted they would move to bar Telefonica from voting on its own offer.

Senior PT executives have also said Telefonica's offer doesn't value Vivo appropriately. Telefonica's earlier bid of EUR5.7 billion was rejected by PT's board last month.

Company website: www.telecom.pt

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