Portugal Telecom (PT) is to talk with its shareholders to decide on an increased EUR6.5 billion offer from Spain’s Telefonica to buy the Portuguese group out of Vivo, their Brazilian mobile joint venture, reports the Financial Times. PT’s board unanimously rejected Telefonica’s original EUR5.7 billion bid for the Vivo stake last month, and is not supporting the revised bid saying it does not reflect the “strategic value” of Vivo to the Spanish group. However, in an apparent signal that it will consider a deal, PT will immediately call a shareholders’ meeting to decide on the latest bid and has said that its key executives – including its chairman, CEO and CFO – will discuss the new offer with Telefonica “until the shareholder’s meeting takes place.” Telefonica has also offered to sell its 10 percent stake in Portugal Telecom, which has a current market value of more than EUR800 million, if the Portuguese group agrees to sell-out of Vivo. Telefonica had earlier threatened to use this stake to launch a hostile takeover for PT if the Portuguese firm did not agree to dispose of its Vivo stake. According to the report, Telefonica’s revised offer gives PT the choice of an immediate sale of its stake or “executing the sale at PT’s sole discretion” over the next three years.

Telefonica’s desire to take control of Vivo – Brazil’s largest operator – is understood to be part of a drive to more closely integrate Vivo with its underperforming Brazilian fixed-line arm, Telesp. According to reports last month, Telefonica has approached PT to forge closer ties between Telesp and Vivo in areas such as network, marketing and back office functions, which it says could generate significant cost savings for both subsidiaries. Telefonica and PT jointly own Brasilcel, a holding company with a controlling stake in Vivo. Telefonica had earlier said it would not raise its initial EUR5.7 billion bid but is understood to have been encouraged to increase its bid after some PT shareholders said they might support a higher offer. Analysts last week predicted that an offer of between EUR6.2 billion to EUR7.5 billion might win PT over.