Monopoly cheek

8 February 2006 By Hugo Dixon

Sonaecom will only proceed with the E11bn offer if it can keep two of the country s mobile networks giving it 65% of the market. No wonder the Portuguese billionaire behind the assault thinks he ll get even richer. But it also makes his bid look a touch flaky.

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Sonaecom, the Portuguese telecoms operator, said it would withdraw its E11bn bid for Portugal Telecom if it could not keep both companies' mobile networks.

All considerations by anyone that make our economic plan unviable will be a limitation of our offer, Paulo de Azevedo, Sonaecom's chief executive, said. We will obviously have not to proceed.

Synergies of E2bn released by merging the two networks were the main assumption supporting the 16% premium it has offered for PT, de Azevedo said.

The networks would together claim 65% of Portugal's mobile customers.

Sonaecom would also sell off either PT's fixedline network or its 58% interest in PT Multimedia, the cable operator.

Sonaecom appealed last year to the European Commission to force PT to make the split. The commission in January referred the decision to Portugual's competition authority.

Santander Group, the Spanish bank, has guaranteed Sonaecom financing for the bid. Sonaecom may also raise up to E1.5bn from a capital increase. Sonae, its largest shareholder, which is controlled by the de Azevedo family, would provide up to E750m to the capital increase.

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