June 4, 2013 / 2:35 PM / 4 years ago

Brazil's Grupo Oi names Portugal Telecom's Bava as CEO

2 Min Read

* Bava to continue heading PT's Portuguese unit

* Oi shares soar in Sao Paulo trading

By Asher Levine

SAO PAULO, June 4 (Reuters) - Brazilian telecommunications conglomerate Grupo Oi SA appointed former Portugal Telecom chief Zeinal Bava as its new chief executive officer on Tuesday, sending its shares up nearly 16 percent.

Bava replaces Jose Mettrau Carneiro da Cunha, who will return to his previous position as Oi chairman, according to a securities filing on Tuesday.

Cunha had taken over as CEO in January following the ouster of Francisco Valim. Recent media reports suggested that Oi's controlling shareholders disagreed with the amount of capital spending called for in Valim's turnaround plan aimed at shoring up an eroding client base and catching up with competitors in Brazil's hotly contested wireless market.

Shares of Grupo Oi soared after the announcement, jumping nearly 15.6 percent to 4.75 reais.

"The market's perception is that there couldn't have been a better choice," said Raffi Dokuzian, a director with brokerage CGD Securities in Sao Paulo. "He is a very renowned executive in Portugal, and the market liked the news."

Bava, who has led Portugal Telecom for five years, will remain in charge of its Portuguese unit. He will focus helping Oi and Portugal Telecom work together more effectively, said the Portuguese company, which is a major shareholder in Grupo Oi and operates units in a number of countries.

Portugal Telecom Chairman Henrique Granadeiro will also take on the functions of that company's CEO.

Ricardo Espirito Santo Salgado, CEO of top Portugal Telecom shareholder BES bank, said he was happy with Bava's appointment.

"An effective turnaround at Oi is vital for creating shareholder value at PT," Salgado wrote in an emailed note to Reuters.

PT shares extended their gains after the announcement and were up 3.3 percent outperforming the broader market in Lisbon , which was up just 0.8 percent.

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