France’s Altice offers Brazil’s Oi 7bn euros for Portugal Telecom

Altice, the parent company of French cable operator Numericable, has made a firm offer of 7.

03 billion euros ($8.

8 billion) to Brazilian operator Oi to acquire Portugal Telecom (PT), the company announced Monday.

If successful, the bid would be result in the second major acquistion by Altice this year after it snapped up control of French mobile company SFR amid a buying spree among European telecommunications companies as they seek to offer a full range of services.

Altice said the “binding, fully financed” offer was for all Portugal Telecom activities “outside of Africa” and did not include the debt of Rioforte, the company in the Espirito Santo banking group that is on the brink of collapse.

The deal also excludes Oi treasury shares and Portugal Telecom financing vehicles, the statement said.

The announcement depressed Altice’s share price, making it drop 1.

3 percent to 49.

03 euros, while boosting PT’s share price 4.

1 percent to 1.

36 euros.

“If this offer is accepted, the transaction net of financial debt and other purchase price adjustments would be financed by new debt and existing cash from Altice,” it said.

The merger between Portugal Telecom and Oi was clouded when the powerful Espirito Santo family’s empire crumbled under huge debts months ago, with its holding company Rioforte owing PT almost 900 million euros.

Oi forced its Portuguese partner to sign a new merger agreement after the collapse, cutting its share in the new combined company to around a quarter from the 38 percent originally agreed.

A Luxembourg court last month effectively decided that Rioforte, the main holding company of the Santo’s non-financial assets, would be liquidated, making it less likely the loan would be repaid.

– Altice gains mobile foothold -If Altice acquires PT, the sale would lead to its “dismantling”, said Pedro Lino, an analyst at Dif Broker.

“For Oi, the sale of Portugal Telecom means an influx of money that will help it concretise its consolidation strategy in Brazil,” Lino told AFP.

For Altice the acquisition of Portugal Telecom means that it gains a mobile operator, plus expanding its share in the high-speed Internet and TV services segments where it is already present with its operator Cabovisao.

Telecommunications companies are seeking a complete range of services including mobile in addition to home phone, high-speed Internet and television both to provide customers with the convenience and savings from a single operator.

Another analyst, Emmanuel Carlier of ING, said: “Seven billion euros is a bit high for the sector but it is justified by the fact that the rate of penetration of fibre is very high in Portugal.

“PT’s net profit surged 46.

6 percent last year to 331 million euros after it hived off its participation in a company in Macau, China.

The British investment fund Apax Partners as well as the Spanish and British telecoms firms Telefonica and Vodafone were also interested in PT.

Luxembourg-registered Altice, owned by French-Israeli billionaire Patrick Drahi, scored a major coup earlier this year when it won a bidding war for France’s number-two mobile phone operator SFR.

The deal, which has yet to close, gives Numericable a mobile operator to complement its cable TV and high-speed Internet offering.

There were concerns that Altice was overstretching itself, however, as the deal financed by debt worth over 14 billion euros exceeded Altice’s market capitalisation.

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