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On Saturday, Telefonica pulled out of negotiations to acquire Portugal Telecoms stake in Vivo Participações (VIVO) for EUR 7.15 billion ($9.3 billion).

The deal fell through after Portugal Telecom’s board of directors failed to accept the Spanish company’s offer by the deadline.

“The deal has been extinguished,” Telefonica said.

Though PT shareholders voted two weeks ago to accept the offer, the Portuguese government used special voting rights to block the sale, citing national interests.

The European Union’s Court of Justice then ruled that the Portuguese government’s blocking of the deal was illegal.

Portugal Telecom is Portugal’s largest telecommunications operator and the Portuguese government demanded it maintain a foothold in Brazil as it did not want to lose Portugal Telecoms’s Brazilian revenue stream.

Telefonica would not comment Saturday on the possibility of legal action following the collapse of the deal.

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­Telefonica has ruled out the possibility of extending the July 16th deadline for its EUR 7.15 billion (USD $9 billion)offer for Portugal Telecom’s stake in their Brazilian joint venture. The offer has been accepted by 74% of Portugal Telecom’s shareholders, although the Portuguese government attempted to use its “golden share” to block the deal. This was later ruled illegal by the European courts.

“This ends July 16,” Chairman Cesar Alierta told Bloomberg News. “Brasilcel is a relationship between Portugal Telecom and Telefonica and as far as I know there is no need for anybody else to interfere.”

The two phone companies jointly own Brasilcel, which controls 60 percent of Vivo Participações (VIVO) . Telefonica originally offered EUR 6.5 billion (USD $7 billion) for the Brazilian stake, but later raised it to the current EUR 7.15 billion (USD $9 billion).

Telefonica will go to a Dutch arbitration court to seek the breakup of Brasilcel if it can’t reach an agreement this week, Spanish newspaper ABC reported today, citing people close to the phone company’s board it didn’t identify. In the event that Brasilcel were broken up, Telefonica would seek to buy shares in Vivo in the open market until it reaches majority control, ABC added.

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See the Vivo Participações (VIVO) record in EMAT.

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Telefonica has again increased its offer for Portugal Telecom’s stake in Brazilian operator Vivo Participações (VIVO), hours before Portugal Telecom shareholders are expected to vote on the deal.

Telefonica has now boosted its previous EUR 6.5 billion offer by 10 percent. The new consideration amounts to EUR 7.15 billion and is valid until 2 July. All the other terms and conditions of the previous offer launched on 1 June remain the same. The revamped offer will be submitted to Portugal Telecom shareholders at the general shareholders meeting on 30 June.

Telefonica had already increased its initial EUR 5.7 billion offer by 14 percent to 6.5 billion on 1 June to gain support from Portugal Telecom Shareholders. Portugal Telecoms board unanimously rejected Telefonica’s previous offers, claiming that the bids did not reflect the strategic value of the asset for Telefonica.

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See the Vivo Participações (VIVO) record in EMAT.

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Portuguese prime minister Jose Socrates has required state bank Caixa Geral de Depositos to reject Telefonica’s bid for Portugal Telecom’s stake in Vivo Participações (VIVO), Europa Press reports.

“The government has oriented Caixa Geral de Depositos to vote against [Telefonica's bid] at the Portugal Telecom shareholder assembly, that is the government’s position,” said Socrates. According to the prime minister, “for the government, the strategic interest of the country is for Portugal Telecom to have a large dimension and scale”.

Caixa currently holds a 7.3 percent stake in Portugal Telecom. Two other Portugal Telecom shareholders, namely Banco Espirito Santo and investment fund Ongoing, have recently announced they will oppose the sale at the 30 June meeting.

On 30 June, Portugal Telecom shareholders will discuss and vote on Telefonica’s EUR 6.5 billion offer for Brazilian joint venture Vivo Participações (VIVO).

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See the Vivo Participações (VIVO) record in EMAT.

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Portugal Telecom’s chairman and General Meeting have rejected Telefonica’s request to discuss the distribution of an extraordinary dividend if the Portuguese operator’s shareholders accept Telefonica’s bid for full control of Brazilian mobile operator Vivo. Last week, Telefonica requested that an additional item be included on the agenda of Portugal Telecom’s shareholders meeting scheduled for 30 June.

Telefonica proposed the reinforcement of Portugal Telecom’s current shareholder remuneration policy through the distribution of a supplemental and extraordinary dividend in the amount of EUR 1 per share, or superior, for the financial year 2010. PT said that it rejected the dividend proposal on legal grounds. The chairman of Portugal Telecom’s shareholders meeting claims the proposed dividend discussion is conditional on the approval of Telefonica’s offer at the same meeting, and that dividend proposals require the ratification of the company’s directors and its audit committee, and the review of the company’s results.

At the shareholders meeting on 30 June, Portugal Telecom shareholders will discuss and vote on Telefonica’s revised offer of EUR 6.5 billion (USD $8 billion) for Vivo.

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See the Vivo Participações (VIVO) and the Telecomunicações de São Paulo S.A. (Telesp) record in EMAT.

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Telefonica has increased its offer to buy the 50% of Brasilcel that is owned by its co-investor Portugal Telecom to €6.5 billion (USD $8 billion).

Telefonica had previously offered €5.7billion (USD $7 billion) for the stake, an offer that was rejected, leading the Spanish incumbent to suggest that a hostile takeover bid for its Portugese counterpart – in which it already holds a ten per cent stake – remained an option if a sale of the Brasilcel stake could not be agreed.

Brasilcel owns 60 per cent of mobile player Vivo, which leads the Brazilian mobile market and had 53.9 million subscribers at the end of the first quarter this year, according to data from Informa’s WCIS.

Telefonica is keen to merge the Vivo operation with its Brazilian fixed arm Telesp, in a bid to drive cost synergies in the market, a move which Portugal Telecom views with scepticism.

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See the Vivo Participações (VIVO) and the Telecomunicações de São Paulo S.A. (Telesp) record in EMAT.

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Telefónica is seeking closer integration between its Brazilian fixed-line business and Vivo, reports the Financial Times today.

After a rejected buy out of Vivo from Portugal Telecom by Telefonica in 2007, the Spanish conglomerate seeks to improve its market position in Brazil with a stronger operational relationship between Telesp and Vivo.

In the coming weeks, we should see discussions between the European giants as they look to agree on terms of the closer integration.

Telefónica and Portugal Telecom jointly own a holding company that has a 59 per cent stake in the mobile operator.

Read the full article by the Financial Times titled: Telefónica seeks deeper Vivo ties

Brazilian mobile network operator, Vivo Participacoes saw its 3rd quarter net profit jump by 154% to R$ 340 million (US$197 million), largely due to lower borrowing costs. Revenues were up by 4% to R$ 3.79 billion (US$2.2 billion).

 In 3Q09, Vivo managed to attracted just over 2 million new customers. In September, Vivo‘s customer base reached 48.85 million customers, increasing its general market share to 29.4% and post-paid market share to 31.4%. The GSM/WCDMA operation recorded more than 39.4 million subscribers, representing 80.7% of the total customer base.

The customer base grew 15.5% in the quarter when compared to the same period of last year. Vivo originated from the merger of several Brazilian mobile phone operations under a joint-venture owned equally by Portugal Telecom and Spain’s Telefónica.

Vivo Participações (VIVO) account record in EMAT.