Telefonica reportedly in deal to buy Vivo

Spain's Telefonica has reached a deal with Portugal Telecom to buy its part of Brazilian mobile operator Vivo for 7.5 billion euros, resolving a long-running battle, newspaper El Pais reported on Wednesday.

A spokesman for Telefonica declined to comment.

The report, which cited sources familiar with the talks, said the deal had the blessing of the Portuguese government which had blocked an earlier deal to sell the stake for 350 million euros less, or 7.15 billion euros, despite getting backing from PT's shareholders.

For its part PT would use the proceeds to take a stake in Brazil's Oi, El Pais said, echoing a simliar report from Lisbon's O Jornal de Negocios late on Tuesday.

Full control of Vivo would allow Telefonica to offset the impact of slowing revenues from its largely mature businesses in Europe, just as it faces stiff competition in Brazil from its biggest rival, Carlos Slim's America Movil.

Slim's group is integrating its fixed and mobile businesses and Telefonica wants to do the same.

O Jornal de Negocios did not cite its sources for reporting PT already had an agreement with its main shareholders but was awaiting formal approval by its board this week.

A memorandum of understanding on buying the stake in Oi should be signed in the next few days, it said.