Telefonica Takes Control Of Brazil's Vivo After EUR4.5 Billion Payment

Spain's Telefonica SA (TEF) on Monday said it has taken control of Brazilian mobile telephone company Vivo Participacoes SA (VIV) after making an initial EUR4.5 billion payment to its partner in the joint venture, Portugal Telecom (PT).

The acquisition marks the latest phase of consolidation in the Brazilian telecommunications market, which will now see PT use the proceeds to buy a 22.4% stake in rival Brazilian telecommunications company Oi (TMAR5.BR).

In a statement, Telefonica said that as a result of the payment, it has taken control of Portugal Telecom's 50% of Brasilcel, the holding company that in turn owns about 60% of Vivo. Telefonica will pay the remaining EUR3 billion in a number of installments over the next year, starting with a payment of the first payment of EUR1 billion due in December and the final EUR2 billion due in October 2011.

Telefonica confirmed it will now prepare to launch a tender offer to buy up all voting shares in Vivo, for a price equal to 80% of the price paid for each voting share of Vivo owned by Brasilcel.

Brazil's telecommunications regulator, Anatel, had approved Telefonica's purchase of Portugal Telecom's stake in Vivo on Thursday, after it concluded that the purchase only involves a change in shareholders and doesn't affect competition in the market.

-By Matthew Cowley, Dow Jones Newswires; [phone]; [e-mail]