The battle for the Portuguese telecommunications assets of Brazil’s Oi SA is heating up. It was announced Wednesday that private equity funds Apax Partners and Bain Capital have made a joint $8.8 billion offer for the Portuguese assets of Oi SA (ADR) (NYSE:OIBR) (BVMF:OIBR4). This puts the ball in the court of France’s Altice SA (AMS:ATC), who analysts say is likely to make a counter bid which could spark a bidding war.

OI SA

The offer from the two PE firms is for 7.075 billion euros is slightly higher than the €7.025 billion bid Altice made for the assets just over a week ago.

Oi’s disastrous merger with Portugal Telecom

Oi acquired Portugal Telecom just over a year ago, but the deal that closed this summer has turned out to be a disaster. It was announced a few months ago that Portugal Telecom, SGPS (ADR) (NYSE:PT) (ELI:PTC) had put €900 million in RioForte, a division of severely troubled Banco Espirito Santo SA (ELI:BES). RioForte has now defaulted on the debt, leaving a huge hole in Oi’s balance sheet.

Allegations that Portugal Telecom’s management may have knowingly concealed this investment from Oi SA (ADR) (NYSE:OIBR) (BVMF:OIBR4)’s management and the market have also surfaced, Oi’s stock nosedived and CEO Zeinal Bava resigned in October.

Details on offers for Oi

The offers from both Altice SA (AMS:ATC) and the PE firms do not include the Oi SA (ADR) (NYSE:OIBR) (BVMF:OIBR4)’s RioForte investment, debt or other African assets. Both offers make €800 million of the price based on the assets’ future revenue and cash flow.

The offer from Bain and Apax includes a little more up front and an earn-out payment of €400 million related to future revenue generation, as well as a €400 million payout related the future generation of earnings before interest, taxes, depreciation and amortization.

Another offer that surfaced over the weekend takes a different tack: Isabel dos Santos, the daughter of the President of Angola, made an offer of €1.2 billion for Portugal Telecom SGPS, a holding company that owns the near-valueless RioForte investment, a 25.6% stake in Oi SA (ADR) (NYSE:OIBR) (BVMF:OIBR4) and the right to veto asset sales.

The company has refused the offer, but Ms. dos Santos has indicated she intends to continue negotiating.