Telefonica on hold: awaits CVM ruling on GVT deal, plans USD1.1bn investment

10 Dec 2009

Telefonica of Spain intends to wait for the Brazilian exchange regulator CVM to rule on whether Vivendi’s recent takeover of local telco Global Village Telecom (GVT) breached any regulations before deciding whether to contest the deal.

Dow Jones Newswires quotes Antonio Carlos Valente, CEO at Telesp, Telefonica’s Brazilian unit, as saying the French firm’s takeover was ‘unconventional’ but that the firm needs to ‘wait for the results of the CVM investigation’ before it decides whether it can do anything more. The Spanish behemoth had been vying for control of GVT with the French conglomerate since September, but last month Vivendi surprised the market when it announced it had acquired the right to buy 37.9% of GVT, and that it held options to buy an additional 19.6% stake in the company from Tyrus Capital LLC, thus giving it the mandate to assume control of GVT. In the interim, Vivendi has moved to increase its equity stake in GVT to 59.4%, giving it control of the operator.

In a related development, Telefonica says it will invest USD1.14 billion in Telesp next year, chiefly to develop the unit’s broadband internet services. It is understood the parent company is considering its options to adopt a more ‘aggressive’ pricing strategy for its high speed internet access services to combat the threat of rivals – including Vivendi.