Portugal’s Optimus and Zon have agreed to merge in order to compete more effectively with market leader Portugal Telecom, Reuters reports.
The boards of number-three mobile operator Optimus and Zon Multimedia — which runs an MVNO on Vodafone’s network — approved the merger on Monday.
Zon Multimedia is also the country’s leading pay-TV operator.
The deal will create the country’s second largest telecoms firm, with 26 percent of the Portuguese telecoms market and revenues of around EUR1.6 billion.
Optimus shareholders will be granted an equivalent of 40 percent of the combined entity with Zon valued at around 1.5 times more than Optimus, the mobile unit of Sonaecom. A joint statement by the companies said that synergies will be between EUR350 million and EUR400 million.
The companies said the merger will also help them expand internationally. Zon is active in Angola and Mozambique through its 30 percent stake in pay-TV business Zap, which is owned by Zon investor, Isabel dos Santos.
Dos Santos — who is the daughter of Angola’s president and is the biggest shareholder of Angolan mobile operator Unitel — pushed the deal after raising her stake in Zon to 30 percent in June.
According to Wireless Intelligence, Portugal Telecom’s TMN has close to 7.4 million mobile connections, followed by Vodafone with 6.7 million connections and Optimus with 3.6 million.