Portugal Telecom (PT) failed to inform its Brazilian merger partner Oi of an investment in the holding company of a key shareholder under investigation in Luxembourg. Reuters cites a statement from the Portuguese company as saying that it is ‘completely focused’ on resolving Oi’s concerns over the acquisition of EUR897 million (USD1.2 billion) in debt from Rioforte, which is held by one of PT’s largest shareholders, Espirito Santo. The investment in the debt of one of Espirito Santo’s holding companies became an issue after the banking group came under investigation in Luxembourg for financial irregularities. ‘Although the merger between Oi and Portugal Telecom is in its final stages, the investment in Rioforte’s commercial paper is triggering an open conflict and driving the two companies apart, just when they should be approaching total integration,’ Reuters quotes Steven Santos, a manager at the XTB Portugal brokerage, as saying. In October last year PT and Oi announced they would combine operations to form a new Brazil-based company in order to strengthen the Brazilian firm and simplify its ownership structure, while also helping to shore up PT’s operations in its domestic market. The combined entity will have more than 100 million subscribers with annual revenues of around USD19 billion.