UPDATE 1-Brazil competition watchdog approves Oi, Portugal Telecom merger

Tue Jan 14, 2014 8:00am EST

RIO DE JANEIRO Jan 14 (Reuters) - Brazil's competition watchdog Cade has approved the merger of Grupo Oi SA and Portugal Telecom SGPS SA with no restriction, according to a decision published in the country's official gazette on Tuesday.

The two telecom carriers in October announced plans to combine their operations to form a new company with more than 100 million subscribers and almost $19 billion in annual revenue.

Oi's preferred shares jumped 5.6 percent on the news, which Credit Suisse analysts considered "positive, albeit expected by the market."

The new company resulting from the merger, known as CorpCo, is seen as an attempt by Oi to gain more clout to compete in Brazil with bigger rivals such as Spain's Telefonica SA , Telecom Italia SpA's TIM ParticipaƧƵes SA, and Mexico's America Movil SAB.

The move is also considered as akin to throwing a lifeline to Portugal Telecom, which has suffered in recent years along with a flagging Portuguese economy. Portugal Telecom's shares traded nearly 1 percent higher.