Portuguese telecommunications company ZON Multimedia said Thursday its cable television unit signed a five-year contract with the Portuguese unit of the UK's Vodafone Group for the launch of a mobile virtual network operator, or MVNO.

Negotiations between the two companies started in May.

An MVNO leases all, or most, of its capacity from other operators and then sells it on to customers, saving the cost of building and maintaining a network.

At present, there is only one MVNO in Portugal, which was launched last month by Portuguese postal company CTT, using the infrastructure of TMN, the mobile telecommunications unit of Portugal Telecom.

Rival Sonaecom, which owns mobile operator Optimus, has also said it is considering launching an MVNO but didn't provide an exact timetable for this.

ZON is Portugal's second-largest telecommunications firm after PT, having a 75% share of the country's cable television market.

Source:Dow Jones