Altice bids for Portugal Telecom

France-based cable group Altice has made an official bid to acquire the Portuguese assets of Portugal Telecom (PT) from Brazilian Oi for €7.03 billion. The assets in question include the Portuguese incumbent’s business excluding African operations, its Rioforte debt securities, Oi treasury shares and PT’s financing vehicles.

If this bid is accepted, a merger between Oi and PT into a combined entity called CorpCo, first agreed on last year, would be unwound.

In July this year, Oi and PT signed a Memorandum of Understanding where the Brazilian operator would be granted a bigger piece of CorpCo in return helping out with PT’s €847 million of defaulted debt from Rioforte.

The unpleasant debt business with Rioforte seems to have been stalling the proposed CorpCo merger in its tracks. In a complicated set of inter-dependencies a 10% stake in PT is held by troubled Espirito Santo Group, which in turn owns Rioforte. PT’s shares have decreased in value considerably since its Rioforte debt was made public. However, the Altice offer had a positive effect on shares, boosting the price by around 8% in early trading on Monday morning.

Altice already owns Portuguese cable companies Cabovisao and Oni, and last month its acquisition of French mobile operator SFR was approved. SFR is to be merged into Altice subsidiary Numerical, a cable provider in France. In June Altice agreed to buy Virgin Mobile’s French operation for €325 million.

Meanwhile, it has been reported Oi is involved in a joint-bid with América Móvil and Telefónica for the controlling stake of TIM Participações’, the Brazilian operation of Telecom Italia. The proposed offer, yet to be made official, is said to be worth $13 billion.

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