Over the past few months, there has been a battle between Spain's Telefonica (NYSE: TEF) and Portugal Telecom (NYSE: PT). Both companies have 50% control of Brasilcel, a holding company that owns 60% of Vivo (NYSE: VIV), a Brazilian communications company. Because Brazil is an integral part of both companies' growth strategy, Vivo has become a cherished asset and therefore the target of multiple takeover attempts.

Three strikes, not out yet
Three times, Telefonica has tried to bid for Portugal Telecom's (PT) share of Vivo -- and each time the offer price seemed to get more and more outrageous. The latest offer -- $9.04 billion -- has drawn much criticism from Telefonica shareholders because that price tag represents more than 80% of Vivo's market cap. Despite the lofty offer, Portugal's government rejected the bid by using its "golden share," saying that the sale of Vivo would undermine Portugal Telecom's "prospects for long-term growth."

But on Wednesday, Telefonica got a nice boost from Europe's highest court after it said that the government's PT golden share "constitutes an unjustified restriction" in the free movement of capital. The bottom line is that PT is going to have to surrender its cherished golden share, and most likely shareholders will end up accepting Telefonica's offer. Whether that's in a few weeks or in several months is too hard to tell, given the lengthy process both companies may have to go through with the European Court of Justice.

What's at stake?
There is no debate that Brazil is an important piece in Telefonica's puzzle. With declining revenues in its home market of Spain and an increasingly saturated Latin American market, Brazil is a bright spot on an otherwise dark horizon.

According to the Financial Times (registration required), CEO Cesar Alierta believes that "Vivo was conceived largely as a solution to problems at Telefonica's Brazilian fixed-line business Telesp, whose performance has been faltering. By acquiring sole control of Vivo, Mr Alierta presumably hoped that he could crunch it and Telesp together and extract rich synergies and efficiencies."

Brazil accounts for about 15% of Telefonica's revenue, and sales have grown by about 25% since 2005. It's obvious that if PT accepted the bid for Vivo, it would be a strategic victory for the Spanish telecom giant. But at what price?

First of all, the fact that 74% of PT shareholders voted for the latest offer suggests that the price may be way above the average premium. Second, there's no guarantee that full control over Vivo would enable future success in Brazil. Competition is pretty tough, because Carlos Slim Helu's America Movil (NYSE: AMX) and Brasil Telecom (NYSE: BTM) both have significant market share in the country.

As a Telefonica shareholder, I'm a bit undecided on this one. I understand the logic behind the Vivo bid, but the high-priced offer seems to reek of desperation. However, investors seem to think otherwise. Yesterday, when the European Court declared PT's golden share unlawful, shares of Telefonica rose by about 5.1%.

What do you think? Should Telefonica revive its bid for Vivo or should it walk away while it still can? Sound off in the comments section below.

Jordan DiPietro owns shares of Telefonica. America Movil is a Motley Fool Global Gains pick. Portugal Telecom is a former Global Gains pick. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.