The two companies proposed a merger in October last year, designed to create a company with over 100 million subscribers and an estimated $19 billion in annual revenue.
Earlier this week the merger hit a setback, as minority shareholders won the right to fight for more favourable terms.
Brazilian securities regulator, CVM, made a preliminary decision that Oi’s controlling owners could not participate in calculating the price of some assets in the transaction.
Oi and Portugal Telecom had planned to use asset prices approved by their largest investors to determine the distribution of shares in the company. However, the decision from CVM could force Oi to buy out non-controlling investors who argue that the transactions favour Oi’s biggest owners.
Raphael Martins, a lawyer representing Oi investor Tempo Capital, said of CVM: “This is a fundamental step in the merger, and they’re going to have to convince minority shareholders of the advantages of the operation, or it won’t happen.”
If the CVM decision goes through, Zeinal Bava, CEO at Oi, will have to improve the deal for non-controlling investors concerned about the dilution of their stock.
A successful merger would allow the new company to compete more aggressively in the Brazilian marketplace against rivals América Móvil and Telecom Italia’s TIM Brasil.
