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Tensions Rise Around Vivo

Ray Le Maistre
5/28/2010

9:00 AM -- Tensions are rising between Telefónica SA (NYSE: TEF) and Portugal Telecom SGPS SA (NYSE: PT) over the Spanish giant's persistence in wanting to buy its Portuguese partner's share of Brazilian mobile operator Vivo Participacoes SA , according to Reuters. (See Telefónica €5.7B Bid for Vivo Rejected.)

The Brazilian market, the largest in Latin America (in terms of services revenues), is set for a boom in smartphone and mobile data services use during the next few years, so having a controlling interest in the country's largest mobile operator is of great interest to Telefónica. (See Telecom Market Spotlight: Latin America.)

However, retaining a stake in the growing Brazilian carrier is just as important to Portugal Telecom, which relies on Vivo for half of its revenues.

Now the Portuguese operator's reluctance to sell has led to talk of a potential hostile takeover.

— Ray Le Maistre, International Managing Editor, Light Reading

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