Brazil sees no risk for Oi-Portugal Telecom merger, sources say

BRASILIA, July 11 Fri Jul 11, 2014 1:15pm EDT

BRASILIA, July 11 (Reuters) - The Brazilian government does not see a merger between Grupo Oi SA and Portugal Telecom SPGS SA at risk, following tension between the companies over Portugal Telecom's debt deals with troubled Banco EspĂ­rito Santo SA, three sources with knowledge of the situation said on Friday.

The sources, who declined to be identified because of the sensitivity of the issue, said the government is monitoring the situation from afar. The Brazilian government has been a major sponsor of the merger since it was devised last year.

In recent days, Oi and state development bank BNDES have lashed out at Portugal Telecom for failing to disclose an investment in the holding company of a key shareholder under investigation in Luxembourg. (Reporting by Leonardo Goy; Writing by Guillermo Parra-Bernal; Editing by Jonathan Oatis)

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