PT’s golden shares ruled illegal by EU
THE European Court of Justice ruled yesterday that Portugal’s golden share in Portugal Telecom (PT) broke EU rules, opening the way to a possible conclusion of PT’s sale of its Brazilian unit to Telefonica.
Portugal stunned investors last week by using its golden share to block a shareholder vote overwhelmingly in favour of selling PT’s stake in Vivo, Brazil’s top cellphone company, to joint venture partner, Spanish peer Telefonica, for €7.15bn (£6bn).
The Portuguese government said it respects the court’s decision but will look at ways to comply with EU law that also safeguard national interests. Some analysts interpreted the statement as indicating the government was likely to attempt to wring concessions from Telefonica.
European Commission (EC) president Jose Manuel Barroso, who is Portuguese, said the ruling confirmed the Commission’s view that golden shares distort the single market. The EC has been on a drive to abolish golden shares in the last five years because it says they act as a barrier to cross-border investment.
Tim Daniels, an analyst at Olivetree Securities in London, said that Telefonica would have to change its offer, favouring the government.