Portugal Telecom, SGPS (ADR) (NYSE:PT): Facing Tough Times.

Boston, MA, 03/28/2014  (usastockreports)- Portugal Telecom, SGPS (ADR) (NYSE:PT) and Oi SA (NYSE:OIBR) had announced a merger in February this year. Portugal Telecom is a telecommunication major in Portugal .The company also has operations in Brazil and Africa .Oi SA on the other hand is a Brazil based company providing telecom services in Brazil as well as in foreign market. The coming together of PT and Oi SA to form a single listed Brazilian Company called CorpCo was much awaited news not only for the telecom sector but also for the investors who had their money in either of the companies.

The new entity CorpCo will mean that two equally strong companies will come together to cater to the huge demand of the Brazilian market believed to be the fifth largest wireless market.

Deal moves forward

On March 27, 2014 the Portugal regulatory body has Okayed the merger of the two companies. The merger had already received a green signal from the Brazilian authorities in February. This is positively good news as means that this deal will now move ahead as planned.

However there are many more aspects of the deal which need to be finalized like assessment of Portugal Telecom, SGPS (ADR) (NYSE:PT)’s assets and the proposed capital increase.

There is also a minority of shareholders against the deal who need to be placated.

Oi gets into trouble

Oi shares tipped downwards after the Brazilian authorities have suspended its offer of shares by 30 days. This might pose as a setback to the Oi PT deal that had been announced in February 2014 .The public offer of Oi share is a necessary pre requirement leading to the merger.

Oi has announced that it will clarify the issue soon and will resolve any irregularity so that the proposed merger can go ahead.

The road ahead for PT

Portugal Telecom, SGPS (ADR) (NYSE:PT) has its fate invariably linked to the deal now. Oi’s troubles have seen PT share values also getting affected.

Portugal Telecom, SGPS (ADR) (NYSE:PT)’s shares have fallen by about 1 percent in value and the stock is currently priced at $4.18 a share.

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