Portugal Telecom's credit rating could be cut to junk as a consequence of its year-long efforts to fend off a takeover bid from Sonaecom, a rival domestic telecoms company, according to bank analysts.

Portugal Telecom's board yesterday rejected Sonaecom's €10.50 ($13.8) a share bid, worth €11.9bn. The company also increased the value of its own defence offer to persuade shareholders to reject the takeover bid.