Electricidade de Portugal, SA (EDP), the Portuguese electricity company, was recently forced to sell its indirect participation in Optimus, a Portuguese universal mobile telecommunications system (UMTS) operator, due to the rules stipulated in the UMTS public tender regulation. This regulation provides that the same entity may not hold, either directly or indirectly, more than 10% of the share capital of more than one UMTS-licensed operator.

Until last month, EDP controlled OPTEP SGPS, SA, a holding company that indirectly held a stakeholding in both Optimus and OniWay. These operators were granted UMTS licences on condition that OPTEP (ie, EDP, indirectly) would sell its stakeholding in either Optimus or OniWay by December 31 2001. This deadline was subsequently extended to March 31 2002.

On March 25 2002 EDP sold the entire share capital of OPTEP, which at the time held only an indirect participation in Optimus's share capital, to Thorn Finance SA, a company incorporated under Luxembourg law, thus complying with the provisions of the UMTS public tender regulation.

However, the market questioned this sale; some argued that the shares were merely transferred to another company so that the law could be observed, but that EDP would continue to maintain control over them.

Both ANACOM, the Portuguese telecommunications regulator, and the Portuguese Commission for Securities Markets investigated the transaction and concluded that it was legal.

However, while ANACOM considered the operation to be in line with the UMTS public tender regulation, it warned that any repurchase of the shares previously sold or exercise of a pre-emption right will conflict with the obligations arising from the UMTS public tender and will result in withdrawal of the OniWay UMTS licence.

For further information on this topic please contact Margarida Couto at Vieira de Almeida & Associados by telephone (+351 21 311 3400) or by fax (+351 21 354 89 39) or by email ([email protected]).