Portugal PM: Telefonica's Bid Was Not In PT's Interest

Portuguese Prime Minister Jose Socrates said Wednesday that his government's veto of an EUR7.15 billion bid from Telefonica SA (TEF) to buy Portugal Telecom SGPS S/A's (PT) stake in Brazil's Vivo Participacioes SA (VIV) was made to protect the interest of the country.

"The offer was not in the interest of PT," Socrates told Portuguese television. "The government is protecting the interests of the country."

The Portuguese government Wednesday vetoed the bid from Telefonica despite the approval of a majority of PT shareholders for the transaction.

The veto through the use of so-called golden shares comes after Socrates said in parliament last week Portugal's strategic interest was linked to the dimension and scale of PT.

PT and Telefonica have been locked in a power struggle over Vivo, which the two Iberian telecoms control through a 50-50 joint venture in the investment vehicle Brasilcel, which in turn owns 60% of the Brazilian mobile phone company.

Both companies consider Vivo as key to their future growth prospects.

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