Thursday, October 03, 2013

Agreement between Portugal Telecom and OI was relief for the Brazilian government

The Brazilian government not only supported the merger of OI with Portugal Telecom and was relieved with the celebration of the union between the two companies .

There was great concern about the future of the Brazilian company and doubts about the ability of cash OI in the medium term .

Before the federal approval , two appointments were agreed with the Executive .

The first is a cap on the company through initial public offering ( the minimum threshold is $ 7 billion, but the target is $ 8 billion ) to expand infrastructure investment .

The second is to reduce its annual dividends to shareholders for U.S. $ 500 million - as , in fact , occurred in August after OI lose £ 124 million in the second quarter of this year.

There are about two months , the dome was the Dilma government sought to treat the merger . At the time , executives OI asked BNDES entered the business, but the proposal was promptly rejected by the President .

Internally , there was a fear of repeating mistakes made in 2008 , in the union of OI and Telecom Brazil to create a " supertele " Brazilian . The problem is that the operation , although private , was made possible largely by public funding , including funding from BNDES and state pension funds .

The deal also included push of President Lula , who authorized change in legislation to allow the creation of national giant . But the deal ended up bringing losses .

Of future multinational , the federal government expects a downsizing in the structure of OI considered very " bloated " , besides the implementation of a more austere management company , signed by the reduction of dividends and for more transparency in its decisions .

For the Ministry of Communications , Portugal Telecom is a small company, but has the technology to boost Brazilian .

The OI ranks fourth in the mobile phone market in the country and has the task of covering all of Brazil in wireline operations .

The indebtedness of the tele and fines imposed by Anatel ( National Telecommunications Agency ) for service failures always concern the Plateau that followed , closely, details of the negotiation .

Throughout the process , the two main government interlocutors were Zeinal Bava ( current president of OI and will command CorpCo ) and Otavio Azevedo , chairman of the board of directors of Telemar Participações , parent of OI

In line with the signal Brasilia , Azevedo undertook to advise the Communications Minister Paulo Bernardo , on Tuesday that the fact formalizing the merger would be released yesterday morning .

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