Telefonica: Should Let PT Shareholders Vote On Vivo Offer

Telefonica SA (TEF) said Thursday Portugal Telecom SGPS SA's (PT) shareholders should be allowed to vote on a EUR5.7 million offer Telefonica made for PT's stake in Vivo Participacoes SA (VIV).

In a conference call with investors after the company's first-quarter results, Telefonica Chief Financial Officer Santiago Fernandez Valbuena said PT shareholders should be allowed to vote on the offer Telefonica made Tuesday, which had a premium of about 150% of Vivo's share price at the time.

Portugal Telecom so far has rejected the offer.

In a presentation, Telefonica said it could reap roughly EUR2.8 billion in synergies from a potential merger between its Brazilian fixed-line operator Telecomunicacoes de Sao Paulo (TLPP4.BR) and Vivo.

Currently, PT and Telefonica control Vivo through a joint venture.

"[Rejecting the offer] should raise concern about the corporate governance at Portugal Telecom and the company's past reputation as one that looks out for the best interest of shareholders," Valbuena said.

Company website: www.telefonica.com

-By Jason Sinclair, Dow Jones Newswires; 34 913958127; [e-mail]