Oi deal with Portugal Telecom “not at risk”

14 July 2014 | Kavit Majithia


The Brazilian government has thrown weight behind a planned merger between Portugal Telecom and Oi claiming the deal is not at risk.

There are concerns over Portugal Telecom’s existing debt deals with Banco Espírito Santo and Oi has hit out at the operator for not disclosing a debt investment in holding company Rioforte.
 
Oi’s tie-up with Portugal Telecom, which was scheduled to be completed in April this year, has hit several stumbling blocks.

According to Reuters, a range of financial irregularities have come to light over Portugal Telecom’s dealings with Banco Espírito Santo, its largest bank investor, raising questions over destabilising losses at the bank and other companies associated with the financial institution.

The Brazilian government is monitoring the situation, and it has reportedly consulted regulatory authorities. However, the administration is adamant that the deal will not be called off.
 
“Our belief is that the situation won’t get to the point of sinking the deal,” according to a source. “That would be a lose-all situation.”

According to reports, terms of the deal could be reworked as a result of Portugal Telecom’s investments in Rioforte, which amounts to approximately 40% of the company’s overall market value.