Spanish telecom giant
) has raised its earlier offer for Brazilian broadband provider GVT
to thwart a better counter-offer from Telecom Italia (
). The attempt expresses Telefonica's commitment toward
strengthening its investments in Brazil.
Earlier this month, Telefonica offered GVT €6.7 billion ($8.83
billion) in a cash-and-stock deal, seeking to merge it with its
Brazilian unit Vivo. As part of the deal, Telefonica had also
offered its 8.3% stake in Telecom Italia to Vivendi.
However, Telecom Italia has come up with its own offer for GVT,
which is around €7 billion ($9.22 billion). Further, as part of the
offer, the Italian operator would transfer 20% stake in itself to
GVT's parent company, Vivendi.
Telefonica's latest offer betters the previous one, valuing GVT
at €7.45 billion ($9.82 billion). The transaction includes €4.66
billion ($6.14 billion) in cash along with a 12% share in the new
On its part, Vivendi has confirmed receipt of both offers and
has stated that it will consider the options. Notably, Vivendi had
made a failed attempt to sell GVT last year to U.S. satellite
Pay-TV provider DIRECTV (
Both Telefonica and Telecom Italia's hankering for GVT does not
come as a surprise. The potential acquisition of GVT provides a
win-win situation for the two companies as both are keen on merging
GVT with their own units to consolidate their position in
Meanwhile, the deal is expected to face strict regulatory
scrutiny, particularly if Telefonica merges with GVT. A potential
merger between the two will provide a substantial lead to
Telefonica. Till mid-2014, the Brazilian telecom market remains
dominated by Vivo, TIM Brazil and America Movil S.A.B. de C.V. (
)-owned Claro, with Oi coming in at a distant fourth
Of late, the Spanish telecom behemoth has been suffering in most
of Europe as well as in the Brazilian market. Telefonica has
engaged itself in a market share battle in Latin America's largest
economy and has been spending big bucks on promotion and subsidies
to create an edge for itself. This has considerably affected its
It is worth noting in this regard that Telefonica had failed in
its attempt earlier this year to gain hold of TIM Brazil. We
believe acquiring GVT will allow the carrier to improve its
performance in Brazil, particularly in the broadband and cable
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