Portugal Telecom to hold off Cabo bid

Current owner rejects $14.2 billion from Sonae

By JOHN HOPEWELL

The ownership status of TV Cabo, Portugal's largest pay TV operator, was up in the air Friday after its current owner, Portugal Telecom, rejected an E11 billion ($14.2 billion) hostile takeover bid from the Sonae retail and property conglom.

Appealing to shareholders to reject Sonae's offer, PT chairman-chief exec Henrique Granadeiro announced a clutch of defensive measures against the takeover. These include the spinoff of PT's 58% stake in cable TV division PT Multimedia, which includes TV Cabo. In the view of some commentators, at least, this move clears the way for a sale.

Portuguese competition authorities cleared Sonae's bid in late December, contingent on Sonae selling either PT's fixed line or cable biz in the event of a merger.

Chances that Sonae will acquire PT, Portugal's biggest company, improved Friday when Portugal's CMVM stock market regulator finally approved Sonae's bid.

But analysts estimate Sonae probably will have to hike its current $12.28-per-share offer to buy 50.1% of PT.

Despite operating in a country of only 10.5 million inhabitants, TV Cabo is no minor Euro pay TV operator. Distributed on cable and digital satellite systems, it has an 80%-plus market share and 1.4 million subs. Broadband Internet clients stood at 344,000 in June. PTM's operating profits rose 5%-10% in 2006, PT claims.