In an effort to increase their presence in Brazilian markets,
cable Multi Service Operators (MSO) like
Liberty Global Inc.
) and telecom giant
) are all eyeing for Vivendi SA's subsidiary unit Global Village
Telecom (GVT) - a Brazilian telecom carrier.
These companies along with another private equity firm have
already proposed for an initial bid of over €6 billion ($7.76
billion). Vivendi will review all the proposals and will take the
final call on early January, next year.
We believe that the proceeds from the spin-off of Global
Village Telecom's asset will benefit Vivendi to reduce its
GVT operates in 136 cities in Brazil and offers fixed
telephone, broadband and Voice over Internet Protocol (VoIp)
service to both business and normal customers. Hence, the
acquisition of GVT by these MSO's will not only gain market
traction but will also help these companies to counter stiff
competition that exist in the emerging Brazilian markets.
In the last nine months, GVT's newly launched pay-TV service
has gained 312,000 subscribers and also dominates 15.2% of
Brazilian pay-TV market share.
So, DIRECTV, which is one of the leading satellite TV service
providers in Brazil is considering GVT as a threat, which we
believe may have led them to bid for the company.
Similarly, America Movil is rapidly expanding its pay-TV
service across the Latin American countries with the acquisition
of Pay-TV firm Net Servicos - the largest multi-service cable
company in Latin America. Brazilian market happens to be one of
the profitable markets for the company after Mexico.
Last year, America Movil acquired StarOne S.A. (a satellite
services provider in Brazil). So, further acquisition of GVT's
business will not only consolidate its pay-TV business in the
Brazilian market but will also help them to gain GVT's 8.178
million fixed line subscribers.
We are currently maintaining our long-term Neutral
recommendation on DirecTV, Liberty Global and America Movil.
AMER MOVIL-ADR (AMX): Free Stock Analysis
DIRECTV (DTV): Free Stock Analysis Report
LIBERTY GLBL-A (LBTYA): Free Stock Analysis
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