UPDATE 1-Telemig, Amazonia shares up in Brazil on Vivo deal

(Updates with opening of Vivo shares, savings forecast)

SAO PAULO, Aug 3 (Reuters) - Shares of Brazilian mobile phone companies Telemig Celular and Amazonia Celular rallied on Friday, a day after the companies agreed to be sold to the country's leading wireless operator, Vivo Participacoes.

Telemig's non-voting shares (TMCP4.SA) jumped 3.18 percent to 5.51 reais, while Amazonia's shares (TNCP4.SA) climbed 3.45 percent to 0.60 reais, outperforming a 0.79 drop by the benchmark Bovespa index .BVSP in Sao Paulo.

Late on Thursday Vivo (VIV.N), a joint venture owned by Spain's Telefonica Moviles (TEF.MC) and Portugal Telecom (PTC.LS), said it would buy controlling stakes in Telemig and Amazonia for 1.2 billion reais ($640 million).

The Sao Paulo Stock Exchange briefly suspended trading in Vivo shares (VIVO4.SA) early on Friday. After trading resumed, the shares climbed 1.59 percent to 8.33 reais, bouncing back from a 1.2 percent drop on Thursday.

Once the deal is completed, Vivo will hold a tender offer for the outstanding voting shares held by minority shareholders of both companies, paying 80 percent of the price per share it spent for control, in accordance with Brazilian securities laws.

In addition, Vivo will offer to buy up to a third of the non-voting shares in both Telemig and Amazonia at a 25 percent premium over the average trading price in the 30-day period up to Aug. 1.

Vivo expects cost-savings and tax benefits of about 920 million reais in the coming years once the deal is completed, Chief Executive Roberto Lima said on a conference call with analysts on Friday.

Lima also stressed that Vivo has no immediate plans to delist Telemig and Amazonia, as some analysts have speculated.

The acquisition will give Vivo a much-coveted foothold in Brazil's second-most populous state, Minas Gerais, moving it a step closer to attaining nationwide coverage.

It will also boost its market share to 33 percent from 28.4 percent, increasing its lead over its main rivals -- TIM Participacoes (TCSL4.SA), a unit of Telecom Italia (TLIT.MI), and Claro, owned by Mexican wireless titan America Movil (AMXL.MX).

Both TIM and Claro have boosted their market share significantly in recent years, while Vivo has struggled to hold onto the No. 1 ranking in Brazil's cut-throat wireless market.

($1 = 1.874 reais)

(Reporting by Todd Benson and Alberto Alerigi Jr.)

((Editing by John Wallace; Reuters Messaging: todd.benson.reuters.com@reuters.net; +55 11 5644-7703)) Keywords: BRAZIL TELEMIG/SHARES

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