UPDATE: Telefonica Raises Bid For PT's Stake In Vivo To EUR6.5 Billion

(Adds more details, including response of PT board.)

 
   DOW JONES NEWSWIRES 
 

Spanish telecommunications giant Telefonica SA (TEF, TEF.MC) has sweetened its bid for Portugal Telecom SA's (PT, PTC.LB) indirect stake in Vivo Participacoes SA (VIV) to EUR6.5 billion from its previous EUR5.7 billion offer.

In a filing to the Portuguese stock market regulator, Portugal Telecom said it received Telefonica's revised bid Tuesday.

The new proposal comes with two alternatives: one for an immediate sale of PT's entire stake and another to be executed at PT's sole discretion during a three-year period, the Portuguese company said.

Under Telefonica's revised offer, should PT accept the offer, the Spanish telecommunications company grants PT a call option that can be exercised by either the Portuguese company or by a third party designated by PT over PT's shares held by Telefonica. Telefonica holds a 10% stake in PT.

A person close to the situation had told Dow Jones Newswires earlier Tuesday that Telefonica was planning to raise its bid on the two companies' Brasilcel joint venture to between EUR5.9 billion and EUR6.8 billion.

Telefonica had previously offered EUR5.7 billion for PT's half of Brasilcel, a holding company that owns about 60% of Brazilian cell phone operator Vivo, an offer which PT promptly rejected.

PT's board of directors, which met Tuesday, said Telefonica's new offer doesn't reflect the strategic value of its asset and resolved to call a shareholders meeting so that PT's holders can make a decision on the offer.

Telefonica's new bid expires June 30, but it can be extended if PT submits it to a shareholders' meeting.

The Brazilian venture is considered strategic by both Telefonica and PT, which face stagnant revenue in mature European markets, positioning Brazil as their main growth platform.

Brazil had a total of 179 million cellphone subscriptions in March--equivalent to 93% of the population. That's 17% higher than the year before.

-By Enza Tedesco, Dow Jones Newswires; [e-mail]