S&P: Portugal Telecom, Telefonica unaffected

Standard & Poor's said its ratings and outlook on Portugal Telecom SGPS SA (BBB-/stable/A-3) and Telefónica SA (BBB+/stable/A-2) are unaffected by the proposed local debt-funded acquisition by their joint venture Vivo Participações SA (brAA-/stable/ -) of controlling stakes in two smaller mobile operators.

Vivo's agreement to acquire majority stakes in the controlling shareholders of Telemig Celular SA (BB-/watch positive/-) and Amazônia Celular SA (B+/watch positive/-) will increase Vivo's Brazilian population coverage to 84%, its market share to about 33% and encompass the wealthy and populous state of Minas Gerais, according the agency.

Including subsequent tender offers, the total consideration could reach R$2.8 billion, S&P said, which adds about 0.1 times to Portugal Telecom's debt-to-EBITDA ratio and even less for Telefónica.

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