Telefonica launches USD9bn bid for Vivendi’s Brazilian unit GVT

5 Aug 2014

Spanish giant Telefonica has launched a EUR6.7 billion (USD9 billion) bid for Vivendi’s Brazilian telecoms business Global Village Telecom (GVT), as it looks to continue its expansion in Brazil and address antitrust concerns in the country. Under the offer, the French media group would receive BRL11.96 billion (USD5.3 billion) in cash and shares in Telefonica’s Brazilian unit – branded Vivo – along with rights to purchase a roughly 8% stake in Telecom Italia (TI) from the Madrid-based operator, in a move that would effectively reduce Telefonica’s strength in Brazil’s cellular market. The Spanish group is struggling to comply with a December regulatory ruling in Brazil that has questioned its role as a shareholder in TI – which owns Brazil’s second largest carrier TIM Participacoes (TIM Brasil). Industry watchers note that a move by Telefonica to reduce its influence in Italy and simultaneously strengthen its Brazilian fixed line business via a tie-up with GVT makes sense.

Although Telefonica’s latest strategy may yet be opposed by TI, whose CEO Marco Patuano reportedly favours expanding TIM Brasil through its own merger with GVT, a strategic withdrawal from Italy may satisfy concerns raised by the Brazilian anti-trust agency Cade which ruled late last year that the Madrid-based group must exit TI if it wants to remain in control of Vivo. Divesting an 8% share of the Italian group reduces its stockholding to ‘close to zero’.

According to CommsUpdate, on 1 August Vivendi reached out to sale advisers with regards to its intention to resume the desired sale of its Brazilian fixed line operator GVT, which is valued at approximately EUR7 billion. According to unnamed sources familiar with the matter, the French conglomerate is expected to hire the investment banking divisions of Rothschild and Deutsche Bank to resume their roles as advisers in the deal.

Brazil, Italy, Spain, Global Village Telecom (GVT), Telecom Italia (TIM), Telefonica, Telefonica Brasil (Vivo), TIM Brasil