Speculation surrounding the former Portuguese state monopoly, Portugal Telecom, which is currently in the middle of fending off a hostile E10.7 billion ($12.8 billion) takeover bid from Portugal’s largest private conglomerate Sonae, has taken a new turn after reports emerged that a group of private equity firms are considering their own $13 billion bid.
A group of private equity firms is reported to be considering a takeover bid for Portugal Telecom.
On top of this, the South African telecoms incumbent, Telkom, has admitted it has been approached by Portuguese investors over a possible role in any takeover.
According to Reuters, Telkom said in an emailed statement that reports it was in talks with Portuguese investors about launching a counter bid for Portugal Telecom referred to one of many growth opportunities that the company is being approached about. No further comment was made.
Reports in the Portuguese media suggest that local investor Joao Pereira Coutinho, who owns a small telecoms company in Portugal, has approached Telkom about the possibility of joining forces to launch a bid for the former state monopoly.
Portugal Telecom is also reportedly being stalked by one group that includes Apollo Management, Blackstone, Kohlberg Kravis Roberts and Permira, and another group made up of Apax Partners, Carlyle, Cinven and Providence.
Telkom enjoys a virtually monopoly in South Africa, and is therefore relatively cash-rich and is looking to expand its reach in Africa. Portugal Telecom, meanwhile, has a number of assets in Africa, in Morocco (Medi Telecom), Angola (Unitel, Multitel and ELTA), Cabo Verde (Cabo Verde Telecom or CVT and Directel CV), Sao Tome (Companhia Sao Tomense or CST), Guinea (Guinea Telecom), Kenya (Kenya Postel) and Mozambique (Teledata and Mozambique Directories or LTM).
Late last year, the South African government finally issued a second fixed-line telecoms license, a move that should end the stranglehold Telkom South has enjoyed in that market for many years. However, it tempered the news of the new license with the confirmation that the unbundling of the local loop in South Africa has been delayed until further notice.
Portugal Telecom recently announced it was offering to pay shareholders E3 billion ($3.57 billion) in dividends until 2008 as part of its strategy to convince shareholders to reject the takeover offer it received from Sonae in February. The bid is Portugal’s largest ever takeover bid in the country’s history.