Fans of Portugal’s legal system will have a hard time coming up with suitable superlatives at the news that PT has lost a court case to the benefit of Optimus after an astounding 14 years of legal wrangling.
Portugal Telecom’s former mobile network subsidiary TMN now has to pay €35 million to Optimus in compensation plus interest.
The dispute relates to a financial mish-mash in 2000 as the two companies parted company. They were unable to reach a sensible agreement on the price to be charged for terminations and the spat ended up with regulator Anacom which decreed that the case should be heard by a court.
Before the judges reached a conclusion, TMN decided to sell its accumulated Optimus credits to PT Comunicações. PT Comunicações used the credits to pay off a debt to Optimus whcih thought this was sharp practice.
After 14 years the courts decide in favor of the former Optimus, forcing PT to pay the original debt with interest.
As of 16 May 2014, Optimus was merged with ZON Multimédia and formed a new company called NOS.
Originally, the sum involved was a mere €12 million but the interminable delays saw the figure ballooning to €35 million with the interest far outstripping the original sum owed.
Of course, PT’s lawyers now are considering if their client has grounds for an appeal.
In the meantime PT, now named Pharol, has lost two-thirds of its value in one year and its directors have decided to buy up the company’s own shares in an attempt to prop up the share price and return some value to shareholders.
Today, Pharol shares reached their lowest ever valuation at 28.6 cents per share showing a saddening decline of 66.32% since the beginning of the year.
This former powerhouse is now worth just €260.9 million and is only just in the PSI-20 of Portugal’s biggest companies.
The company led by Luís Palha da Silva, stated today that "at the meeting of the Executive Committee of 6 August 2015, it was decided to present to the board of directors a proposal for a purchase programme for the Company’s own shares to be submitted to a general meeting of shareholders.”
The company does not reveal the timing or the amount or how share purchases will be funded.
Luís Palha da Silva is sitting on an estimated cash pile of €100 million that could be used, but any buy-back is limited to 10% of the company’s capital. This would cost just €25 million at today’s prices.
PT suffered when its highly controversial €850 million loan to Grupo Espírito Santo’s Rioforte was not repaid as Rioforte had run out of cash and applied for creditor protection.
