Former Portuguese state monopoly Portugal Telecom SGPS SA, which is currently in the middle of fending off a hostile 10.7bn euro ($12.8bn) takeover bid from Portugal’s largest private conglomerate Sonae SGPS SA, has received a welcome boost after Vodafone Group Plc said it opposes the takeover.
Vodafone is the largest mobile operator in the world in terms of revenue, and entered the Portuguese market in 1992 where it is the second largest mobile operator. Vodafone owns 100% of the domestic unit, Vodafone Portugal, which has a customer base of more than 3.9 million customers and covers 100% of the mainland population and the autonomous regions of the Azores and Madeira. In June 2005, Vodafone Portugal’s 3G network reached 72% of the country’s population.
Companies operating in Portugal had until Monday this week to submit position papers with the Portuguese Competition Authority, which must rule on the takeover bid of Portugal Telecom.
Other companies that have filed papers with the competition authority include Oni, the telecoms unit of Energias de Portugal, and cable TV company Cabovisao. PT and media group Cofina has also apparently urged the competition agency to reject the takeover offer.
Portugal Telecom regards Sonae’s offer as a hostile takeover bid, and earlier this month it announced it was offering to pay shareholders 3bn euros ($3.57bn) in dividends until 2008 to convince shareholders to reject the bid. It said the takeover offer significantly undervalued the carrier.
Portugal Telecom owns Portugal’s only fixed-line network. It also owns the country’s largest mobile operator, TMN, and its main pay TV broadcaster, PT Multimedia. It has an international presence in Brazil, Morocco, Guinea Bissau, Cape Verde, Mozambique, Timor, Angola, Kenya, and China.
Sonae meanwhile is controlled by Portugal’s richest man, Belmiro de Azevedo, who was ranked 387 on last year’s Forbes rich list. Sonae’s telecoms unit, Sonaecom, is 23.7% owned by France Telecom SA. Sonaecom owns Portugal’s third placed mobile phone operator, Optimus, as well a small Portuguese fixed-line telecoms operation, Novis. Sonae also owns the country’s largest supermarket chain.
Sonae wants to merge Optimus with Portugal Telecom’s TMN mobile unit. The merged company would have about two-thirds of Portugal’s market of 10 million people, leaving Vodafone’s local unit in third position.
It is perhaps no wonder then that Vodafone in its position paper said it was against the takeover bid in its current form. Vodafone opposes concentration in the mobile sector, the operator said in a statement about its filing. It said Sonaecom’s bid could create or reinforce a dominant position which could result in serious hindrances to competition in the mobile communications market.
Vodafone Portugal also said concentration would be heightened for multimedia content and by PT’s dominance of the country’s electronic communications markets. This is because Sonaecom is also bidding for PT Multimedia, PT’s internet and cable TV holding company.
Meanwhile, Portugal Telecom has vowed to continue its bid for a 34% stake in Namibia’s only mobile operator and is going ahead with the launch of a service in Congo, despite SonaeCom’s takeover bid. Last week PT disclosed that it had dropped out of the bidding for 35% in Tunisie Telecom.