Spanish carrier Telefonica confirmed on Wednesday that it has held discussions with Portugal Telecom on the acquisition of the Portuguese company’s 50 per cent share in Brazilian operator Vivo but denied it has reached an agreement.

The revelation came after rising speculation that a deal hinges on whether Portugal Telecom can substitute its half of Vivo for another investment on the Brazilian telecoms market.

Telefonica is believed to have supported the EUR11.9bn hostile bid for Portugal Telecom by rival Portuguese operator Sonaecom, on the understanding that Sonaecom would sell the stake in Vivo to Telefonica. However, the bid was unsuccessful.

Telefonica already owns 50 per cent of Vivo and has a 10 per cent stake in Portugal Telecom.