Digitaltveurope.com

Fresh from securing regulatory acceptance of Numericable’s takeover of SFR, telecoms investor Patrick Drahi’s Altice vehicle has made a binding offer to acquire Portugal Telecom’s domestic Portuguese business with a value of €7.025 billion on a cash and debt-free basis. 

The assets being bid for comprise the existing business of Portugal Telecom outside of Africa and excludes Portugal Telecom’s Rio Forte debt securities, Oi treasury shares and Portugal Telecom financing vehicles.

The bid includes a €400 million earn-out related to the future revenue generation of Portugal Telecom and a €400 million earn-out related to the future generation of operating free cash flow.

Drahi is proposing to raise new debt to finance the bid if it is accepted. News of a potential bid was first reported a month ago.

The deal would see an end to the troubled ongoing integration of Portugal Telecom and Brazil’s Oi, which ran into serious problems as a result of a €897 million loan made by Portugal Telecom to Rio Forte, the international arm of shareholder Espirito Santo in April. As a result, Oi forced a new merger deal that saw Portugal Telecom’s stake in the combined entity fall from 38% to 25.6%. The botched deal led to the departure of Oi CEO and former Portugal Telecom CEO Zeinal Bava last month.

Vodafone and Telefónica have been seen as rival potential buyers for Portugal Telecom. Altice already owns assets in the country, notably in the form of cable operator Cabovisão.  In an interview with Portuguese business paper Diario Economico, Altice CEO Dexter Goei promised that Altice’s acquisition would see the creation of 4,000 new jobs in Portugal.