Telefonica’s bid for the Brazilian mobile market has sparked a war with Portugal’s Telecom. Late on Monday, the Spanish group made an offer to buy Portugal Telecom out of a joint venture that controls Vivo Brazil's number one wireless phones operator.
The bid was rejected by the Portuguese carrier despite an eye-watering 140 percent premium -- evidence that the price of access to the remaining growth areas of a maturing industry has reached a new level.
Telefonica is attracted to Brazil because of the enormous market and that brand loyalty is low in Brazil. Taking control of Vivo is a serious ambition for the company, but Portugal sees the value as well. Shares in Portugal Telecom closed up 5.9 percent on Telefonica's move, and in Brazil, the stock of Vivo soared in anticipation of more consolidation moves.
Not to mention, if the bid if unsuccessful in buying out Vivo, Telefonica could pursue Telecom Italia’s assets in Brazil. Using the funds to increase its stake in Telco.
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