The Portuguese incumbent, Portugal Telecom (PT), recently commenced negotiations with the government in order to buy the public switched telecommunications network, which currently belongs to the public domain. At the same time, PT is willing to terminate the concession agreement for the provision of telecommunications services which was executed back in 1995, before the liberalization of the telecommunications sector. PT believes that the operation of the public network under a concession agreement makes sense only under a monopoly regime. In recent declarations to the press the chief executive officer of PT, Murteira Nabo, stated that now that the sector has been completely liberalized and that PT is a 99.9% private company, the concession agreement is no longer justified. Further, Portugal is the only country in the European Union where the public switched telecommunications network still belongs to the state. However, the Portuguese state still holds a golden share in the capital of PT (represented by 500 shares of the company), pursuant to which it retains veto rights for strategic decisions. On the other hand, even though PT has invested over €2.5 billion in the network, the Portuguese government is unwilling to transfer its ownership for free.

PT's proposal follows on from a suggestion made publicly in September by the president of the National Regulatory Authority (ICP), Luís Nazaré, that a company be created to own, manage and operate the public network infrastructure. Nazaré suggested that this company's capital should be open to all interested telecommunications operators. However, his suggestion has not been backed by any public decision or position made by ICP, nor by any other public authority.

Both these proposals have stirred argument and debate in the sector, as a result of the implications that could arise from either one of these options.

The Portuguese government is still evaluating PT's proposal, the terms and conditions of which have not yet been made public. The Portuguese minister responsible for the telecommunications sector has confirmed that negotiations between PT and the government have begun, but refused to comment on the details of the envisaged transaction.

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]).