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Telecom Italia could mount rival USD9.4bn bid for Vivendi-owned GVT

18 Aug 2014

Telecom Italia (TI) is said to be mulling a rival EUR7 billion (USD9.4 billion) bid for Vivendi’s Brazilian internet provider Global Village Telecom (GVT), as it looks to trump the recent roughly EUR6.7 billion offer for the group from Telefonica of Spain. According to a Bloomberg report on Sunday, TI confirmed last Thursday that it was conducting a detailed review on the possibility of floating a bid for GVT that would result in an ‘industrial combination’ between GVT and TIM Participacoes (TIM Brasil). The Italian group’s chief executive officer Marco Patuano met Vivendi chairman Vincent Bollore last week to discuss a possible offer for the French media group’s Brazilian telecoms unit, with TI proposing to merge TIM Brasil with GVT, in return for which Vivendi would take a stake in the Italian group. It is understood that TI is waiting for the approvals by its board and that of its Brazilian unit to go ahead with a bid to snare the deal from Telefonica. The all-stock offer is reportedly expected to be made by the end of the month or early next month.

Earlier this month, Telefonica launched a EUR6.7 billion bid for Vivendi’s Brazilian telecoms business 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 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 – given its influence in Brazil’s second largest carrier 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.

Brazil, Global Village Telecom (GVT), Telecom Italia (TIM), Telefonica, Vivendi

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