Vivendi would get 11.96 billion reais ($5.3 billion) in cash and shares in Telefonica’s Brazil unit, Madrid-based Telefonica, Europe’s second-largest phone company, said today. Vivendi would also get a right to buy about an 8 percent stake in Telecom Italia SpA (TIT) from Telefonica, a transaction that would reduce Telefonica’s clout in Brazil’s wireless market.
Telefonica is seeking to expand in a market where demand for video streaming is boosting revenue at Web-access providers, while earnings drop in its home market Spain amid intense competition. The company, Brazil’s largest wireless provider, is also grappling with how to comply with December regulatory rulings that called into question its role as a shareholder of Telecom Italia, the owner of the No. 2 mobile carrier in the country.
“This is an absolutely sensible move from Telefonica,” said Ralph Szymczak, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany. “They’re trying to get out of Italy and would strengthen their Brazilian business through a merger with GVT.”
Telefonica is seeking to expand in a market where demand for video streaming is... Read More
Vivendi’s Disposals
Vivendi said none of its units are for sale, though it will study Telefonica’s offer. Vivendi’s statement implies it would be willing to sell, and that it is waiting for any counter-bids, analysts at Liberum said today in a note. Liberum had valued GVT at 5.8 billion euros.Vivendi, based in Paris, has announced more than $30 billion of asset sales since it began a strategy review about two years ago, including the pending disposal of mobile-phone unit SFR in a $23 billion deal, as it seeks to focus on media assets.
The bid consists of 60 percent cash and a 12 percent stake for Vivendi in Telefonica’s Brazilian unit Vivo, according to the French media company. The offer expires on Sept. 3 unless Telefonica decides to extend it.
Telefonica lost out to Vivendi in an initial attempt to buy GVT in 2009. At the time, Vivendi’s offer of $4.18 billion topped the $4 billion bid made by its Spanish rival.
Telecom Italia
Telefonica’s new attempt may be opposed by Telecom Italia. Chief Executive Officer Marco Patuano is in favor of expanding its Tim Brasil unit, the country’s No. 2 wireless operator behind Vivo, through an eventual merger with GVT, people familiar with the plan said in May.A spokesman for Telecom Italia declined to comment on Telefonica’s offer for GVT. The Italian company’s shares fell 4.1 percent to 83 cents in Milan.
Extracting itself from Italy may help Telefonica allay concerns voiced by Brazilian agency Cade, which last year said the Spanish company must completely exit Telecom Italia if it wants to remain in control of its own unit in Brazil. A sale of a stake of about 8 percent in Telecom Italia would bring Telefonica’s holding in Italy’s largest phone company close to zero.
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