Telefonica Offers 1.55 New Telesp Shares For Each Vivo Share In Brazil

MADRID (Dow Jones)-Spanish telecommunications giant Telefonica SA (TEF, TEF.MC) said late Friday that directors of its two Brazilian units have approved the exchange ratio for their planned merger.

Telefonica said in a filing with regulators that each share in mobile-phone provider Vivo (VIV, VIVO4.BR) will be exchanged for 1.55 new shares in Telesp SA (TLPP4.BR), the telephone company serving portions of Brazil's biggest and wealthiest state of Sao Paulo.

Telefonica consolidated control of Vivo last year after a bruising battle with former Iberian partner Portugal Telecom (PT, PTC.LB). Brazil's young population and relatively low mobile penetration rate make it a prime market to pick up new wireless and Internet customers at a time when mature Spanish telecoms markets are suffering from the lingering impact of a severe economic contraction.

The purchase has allowed the company to become Brazil's No. 1 integrated telecommunications company by merging Vivo with Telesp, resulting in a consolidated market share of about 27%, in Brazil.

Upon approval of the transaction by Vivo and Telesp shareholders, and following the completion of the merger, Telefonica said it will own 73.8% of Telesp.

-By Santiago Perez, Dow Jones Newswires; (34) 618 528 681; [e-mail]