Portugal Telecom (PT) and Oi, Brazil’s fourth-largest mobile operator, have agreed to combine in a bid to create the leading operator in Portuguese-speaking markets.

The two operators will create an entity to be incorporated in Brazil which boasts over 100 million subscribers across its footprint.

PT is already the largest shareholder in Oi, which is to undertake a capital increase of between BRL7 billion ($3.1 billion) and BRL8 billion to give financial flexibility to the new entity, dubbed CorpCo.

This is the culmination of an alliance announced in 2010. The enlarged operator will be headed by CEO Zeinal Bava (pictured).

Although dubbed an operator for all Portuguese speaking markets, in fact the new group is unduly concentrated on Brazil which is the source of three quarters of its revenues.

Portugal accounts for 22 per cent of group revenue, with the remainder from Africa and Asia.

According to GSMA Intelligence figures, Oi is the fourth-largest operator in Brazil with nearly 50 million connections (Q2, 2013 figures).  It is also the country’s largest fixed operator.

CorpCo had proforma revenues of BRL37.5 billion and Ebitda of BRL12.8 billion for 2012.

Portugal Telecom says the merger has projected synergies of approximately BRL5.5 billion.