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Sonaecom, the Portuguese telecoms company, has been given provisional clearance by regulators to proceed with an €11.1bn ($14.1bn) bid for Portugal Telecom, its larger rival.

The ADC, Portugal’s competition authority, has imposed “tough” conditions on the deal, said Paulo Azevedo, chief executive of Sonaecom – but he insisted it was “not giving up” on its hostile bid.

The ADC’s stance may force the hand of private equity groups that have been mulling offers for PT.

Mr Azevedo said no final decision had been taken by Sonaecom’s board on whether to proceed with its bid, but he added a takeover of PT “remains our objective”. However, he ruled out Sonaecom raising its bid. Sonaecom said in February it would pay €9.50 for each PT share.

Several private equity firms are interested in PT. A team of buy-out groups – Apollo Management, Blackstone, Carlyle, Cinven and Providence – was believed to be working together on a potential bid earlier this year.

Following the ADC’s provisional ruling, Sonaecom’s shares surged 5.6 per cent to close at €5.28. PT’s shares rose 2.49 per cent to close at €9.89.

PT’s management urged shareholders to reject Sonaecom’s offer in March, but declined to comment yesterday. People close to the company said shareholders were unlikely to accept €9.50 per share.

The ADC, in its ruling, said Sonaecom would have to give a rival mobile operator access to its network. A combination of the Sonaecom and PT mobile networks, known as Optimus and TMN, would provide services to 64 per cent of Portugal’s subscribers.

The competition authority also said Sonaecom would have to dispose of either PT’s fixed-line phone or cable TV networks.

Copyright The Financial Times Limited 2017. All rights reserved.
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