Telefonica's attempt to assume control of Brazil's leading mobile phone operator, Vivo, edged closer to a conclusion yesterday after the European Court of Justice ruled against a key hurdle to the takeover.
The Spanish company and its local joint venture parner, Portugal Telecom, own 60 per cent of Vivo. Portugal Telecom shareholders have voted in favour of selling the company's stake to Telefonica in a €7.15bn deal. But the move was blocked by the Lisbon government, which last week used its "golden share" in Portugal Telecom to oppose the sale. Yesterday, EU judges ruled such a share was illegal, thereby re-opening the door to a takeover.
The court said Portugal's special rights meant its had "failed to fulfil its obligations pursuant to the free movement of capital".
Jose Manuel Barroso, the Portuguese president of the European Commission, backed the ruling. "It confirms that the position of the commission was the right one – our opposition to golden shares in European companies as a rule," he said. "Except in very, very limited and exceptional cases, the golden shares are in fact against the internal market and against the principle of freedom of circulation."
Tim Daniels, an analyst at Olivetree Securities, said the ruling gave a green light for the deal to go ahead. "We know it passed the shareholder vote... Telefonica may now tweak the offer so that Portugal Telecom's board can recommend it," he added.