The Portuguese competition watchdog AdC has given its approval to Sonaecom’s proposed EUR11.1 billion takeover of Portugal Telecom. The preliminary ruling has, however, added conditions to the deal which could yet mean that Sonaecom walks away. The main condition imposed by the authority is for the disposal of either PT’s fixed line networks or its cable TV networks. Other clauses call for the mobile units of PT and Sonaecom – TMN and Optimus – to free up spectrum to allow for the entry of a new player in the cellular market, while Sonaecom will also have to separate its wholesale and retail wireline businesses. Reuters quotes an unnamed Sonaecom executive as saying: ‘Some of the conditions go beyond what is reasonable and necessary … These are a set of conditions that are difficult and demanding.’
A final ruling will be published in ten days time, once Sonaecom has studied and responded to the preliminary judgement. If it does go ahead with its bid, it will then face the difficult task of convincing PT shareholders to back the deal. PT has said it will pay dividends of EUR3.5 billion and spin off its media and internet division PT Multimedia if shareholders turn down Sonaecom’s offer.