Fallout for Portugal Telecom
July 15 2010, Telecom Finance

The European Court of Justice handed down a decision in mid-July which ruled the Portuguese government's "golden share" in Portugal Telecom illegal on grounds that it obstructed free movement of capital. However the ECJ neglected to rule specifically whether its decision was retroactive. In the past the Portuguese government had used its golden share to prevent Portugal Telecom from selling its Brazilian mobile business JV Vivo to Spanish firm Telefonica.

David Eisenberg, partner at law firm White & Case, said: "This decision is not surprising - it's a trend we're seeing in the European Union. The EU has been steadily limiting governments' special corporate governance rights in private sector companies, particularly there the governments have limited direct economic interests. Because the ruling is not retroactive it does not affect Portugal's decision to veto the Vivo transaction or the company's statutes, in which state's special rights are granted."