Brazil’s antimonopoly agency – the Administrative Council for Economic Defense (CADE) – yesterday (25 March 2015) approved, with certain conditions, the takeover of French media group Vivendi’s Brazilian telco division Global Village Telecom (GVT) by Spanish telecoms giant Telefonica, as well as related share transfers, under a deal first agreed in September 2014. As reported earlier this month by TeleGeography’s CommsUpdate, Brazilian telecoms regulator Anatel sanctioned the second phase of Telefonica’s acquisition of broadband operator GVT from Vivendi; the secondary stage of the process involves the transfer of shares in Telecom Italia (TI) and Telefonica Brasil (Vivo) to Vivendi. In the original deal worth a total of USD9.83 billion, Telefonica agreed to pay Vivendi EUR4.66 billion (USD6 billion) in cash, alongside a 7.4% equity stake in Telefonica Brasil (valued at EUR2.02 billion) and a 5.7% stake in TI (valued at EUR1.01 billion), while in its mid-March decision Anatel noted that the size of the stakes being transferred to Vivendi had been modified to 11.3% (Telefonica Brasil) and 8.3% (TI). In its approval of the first phase of the deal in December 2014, Anatel ruled that Telefonica and GVT must cede some of their fixed telephony licences in service areas where their operations overlap, and also maintain existing service plans for customers for a period of 18 months.
The CADE’s latest decision states that, with regard to the acquisition of GVT by Telefonica Brazil, GVT and Telefonica have agreed not to reduce the current geographical coverage of fixed switched telephony, fixed broadband or pay-TV for three years, while the operators must maintain, for three years, the monthly national average broadband access speed contracted by current GVT customers of at least 15.1Mbps; in the state of Sao Paulo the monthly average should be at least 18.25Mbps. Furthermore, to reduce the competition problems arising from the participation of Vivendi in Telefonica Brazil and TI, agreements are in place stating that Vivendi will sell shares in Telefonica Brazil, in a ‘gradual’ divestment, while in the meantime Vivendi’s voting rights in Telefonica Brazil will be suspended. Similarly, in order to mitigate competition concerns arising from the spin-off of Telco (a holding company with interest in TI, with shareholders including Telefonica), an agreement signed with Telefonica indicates that the Spanish group will waive voting rights attached to the 6.5% voting share it will still hold in TI after the conclusion of transactions, ahead of an eventual divestment of the shares – although the deadline for the divestment is confidential, the CADE noted in its announcement online.