TEF Hits Back Over Vivo

7:00 AM -- Telefónica SA (NYSE: TEF) is refusing to concede in the ongoing struggle to take full control of Brasilcel, the joint venture company that holds a majority stake in Brazilian mobile operator Vivo Participacoes SA .

The Spanish giant's €7.15 billion (US$8.8 billion) offer to buy out Portugal Telecom SGPS SA (NYSE: PT), the current joint owner of Brasilcel, was good enough for PT's shareholders, but the deal was blocked by the Portuguese government on Wednesday, a move that Telefónica believes is "illegal." (See Telefónica's $8.8B Brazilian Deal Blocked.)

In a document filed with the Spanish National Securities Market Commission, Telefónica stated that it believes the Portuguese government's veto is "illegal, as it infringes, in addition to Portuguese law, European Union Law, in particular, among others, Article 56 of the European Union Treaty."

The statement is further confirmation that Telefónica is determined to take majority control of Vivo, which has more than 54 million customers and a 30 percent share of the Brazilian mobile market. The Spanish carrier wants to combine its own fixed-line assets in Brazil with Vivo to create a fixed/mobile powerhouse but can't achieve that strategic aim until it has majority control of the mobile operator.

In the hope that the Portuguese government's veto will be overturned, Telefónica has extended its offer for PT's stake in Brasilcel until the end of July 16.

— Ray Le Maistre, International Managing Editor, Light Reading

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