Portugal Telecom (PT) is mulling a full merger with its Brazilian partner, Tele Norte Leste – better known as Oi – reports Dow Jones Newswires. The Portuguese firm already owns a 25.3 percent stake in the operator, but the recent decision by the Portuguese government to relinquish its ‘golden share’ has removed “a major obstacle to a merger,” says the report. The golden share had given the government veto rights over some key corporate decisions. According to a report in Portugal’s Diario Economico newspaper (which is owned by Portugal’s Grupo Ongoing, the second-largest shareholder in PT), the merger had been considered prior to PT’s purchase of its initial stake in Oi earlier this year, but the existence of the golden share made it impossible.

PT paid BRL8.32 billion – around US$5 billion – for its 25.3 percent stake in Oi in a deal that closed in March this year. The stake was built through direct investments in the company and indirect positions in its biggest shareholders. Its investment in Oi marked a return to the Brazilian market for the firm after it sold its 50 percent stake in Vivo – the country’s largest mobile operator – to co-owner Telefonica for EUR7.5 billion in July 2010. Oi is Brazil’s largest fixed-line operator and fourth-largest mobile operator. According to the latest Wireless Intelligence data, Oi had an estimated 43.2 million mobile connections in Q2, behind Vivo (64 million), America Movil’s Claro (55.3 million) and TIM Brasil (55.1 million).