Portugal Telecom SGPS SA decided to buy a minimum of 22 percent of Telemar Norte Leste SA, Brazil’s leading phone company, for 8.32 billion reais ($5 billion) in cash, 6 months right after promoting its stake inside the country’s largest wireless operator.

Telemar, which operates beneath the Oi brand name, also strategies to acquire as a lot as 10 percent of Portugal Telecom following the transaction is finished, the companies stated in authoritarian filings nowadays.

“Brazil is really a biological focus for Portugal Telecom,” said Zeinal Bava, CEO of the Lisbon based company’s, in a conference call. “Brazil, Africa and Portugal are the company’s biggest strategic bets.”

Portugal’s greatest telephone business is getting a stake in Telemar right after selling its stake in Vivo Participacoes SA to Telefonica SA for seven.5 billion euros ($10 billion) in July. Oi will get most of its income from wireline service although rivaling Vivo inside the wireless market. Portugal Telecom desires to duplicate the turnaround it done in Portugal of its very own fixed-line business.

Oi will symbolize more than 50 % with the Portuguese company’s revenue, Bava mentioned. Vivo supplied 48 % of their income last year. An investment will not have an effect on Portugal Telecom’s share policy, Bava stated.

Capital Increases

As component of the agreement, Tele Norte Leste Participacoes stated it will problem as a lot as 12 billion reais in new voting and preferred shares. Telemar Participacoes SA will take a minimum of 1.36 billion reais of those shares to keep its management of Tele Norte Leste Participacoes.

Rio de Janeiro-based Oi as well plans to generate 12 billion reais of recent shares, a minimum of 2.96 billion reais which will likely be buying at vast majority shareholder Tele Norte Leste, based on the filing.