Brazil giant Telemar to take over Telecom Participacoes SA

By Margarita Snegireva. Shares of Brazil's largest phone company Telemar rose 13.6 percent on Thursday after the company's controlling shareholder said talks to take over rival Brasil Telecom had "intensified" recently.

Photo: Brazil giant Telemar to take over Telecom Participacoes SA

The shares, which have gained 32 percent since Monday, rose to 44.1 reais and traded as high as 44.64 reais. Telemar Participacoes, a holding company that controls Telemar, said it had not signed any final deal to buy Brasil Telecom, the country's No. 3 phone company.

Oi (Portuguese for "Hi"), formerly known as Telemar, but still legally called Telemar Norte Leste S.A., is the largest landline telephone company in Brazil, considering both lines in service and revenues. It is headquartered in Rio de Janeiro. Oi, along with Telemar Internet Ltda. (Oi Internet) and Companhia AIX Participacoes S.A., are subsidiaries of Tele Norte Leste Participacoes SA (Tele Norte Leste Holding Company, or TNL).

Oi (then known as Telemar) was formed as Tele Norte Leste to merge sixteen state-owned incumbent local exchange carriers (ILECs), during the privatization of Brazilian telecommunications system. Each carrier served a particular Brazilian state in the northern, northeastern and southeastern part of the country. In the break-up of Telebras in 1998 it was sold to a consortium led by the Brazilian construction firm Andrade Gutierrez (21.2%) and Inepar Holdings (20%) as well as other Brazilian corporate and individual investors. The consortium paid 3.434 billion reais.