TELECOMMUNICATIONS : LISBON TO KEEP ITS GOLDEN SHARES IN PORTUGAL TELECOM.

The battle pitting the European Commission against Portugal looks set to continue on the telecommunications front. To the great displeasure of the EU executive, the Portuguese government has declared that it will be keeping its preferential shares in Portugal Telecom (PT). These golden shares' give it the right to use its veto when the historic operator is the target of a public takeover bid, explained Mario Lino, Minister for Public Works, in an interview with the daily Publico. "The state will not give up its golden shares that come with veto rights. They exist for good reasons and are a way of protecting important state interests," he commented.

In early April 2006, the Commission asked the Portuguese government to give up its 500 "preferential shares with veto rights," arguing that they are an obstacle to the free movement of capital and the right of establishment of competitors.

PT was privatised from 1995 to 2000. The...