02 owner Telefonica will seek international arbitration if it does not reach a deal this week with Portugal Telecom (PT) in a tug-of-war over ownership of Brazil’s biggest mobile phone company.
Telefonica is understood to have hardened its stance after weekend talks with PT failed to bear fruit.
The Portuguese government used a “golden share” two weeks ago to block Telefonica’s sweetened €7.15bn (£6bn) offer to buy PT’s stake in their Brazilian joint venture Vivo.
The European Court of Justice later said the use of the golden share breached EU rules on the free movement of capital, and both PT and Telefonica then said they were open to discussing solutions.
Now Telefonica looks set to go to the Permanent Court of Arbitration in The Hague, an institution for the resolution of international disputes, seeking to dissolve its joint venture with PT, Brasilcel, which controls 60 per cent of Vivo, if it does not reach a deal by 16 July.
Sources close to Telefonica say its plan is now to break up Brasilcel then buy up shares of Vivo on the market until it has control.
Telefonica wants to take over Vivo to merge it with its fixed line company in Brazil, Telesp, to fend off growing competition in South America.
Portugal’s government sees PT’s stake in Vivo as representing the national interest because it gives the company an international foothold.
Telefonica declined to comment.
Meanwhile, the firm yesterday launched a new global “e-health” unit, where it says it aims to become a major player in the rapidly expanding healthcare communications field.