29 August 2014
| Kavit Majithia
French group Vivendi is to enter into exclusive talks with Telefónica over the sale of its Brazilian broadband unit, GVT.
Telefónica has seemingly beaten
competition from Telecom Italia, and convinced Vivendi to
choose its bid of €7.45 billion to secure the asset and
solidify its position in the Brazilian market.
The Spanish operator plans to integrate GVT with its existing
Brazilian mobile business, Vivo, as it attempts to further
tap into the growth of the Brazilian middle class.
According to the Financial Times, 40 million
Brazilians have entered the middle class over the past ten
years, turning the country into an essential telecoms market
for global companies.
Telecom Italia’s slightly lower
offer of €7 billion for GVT has been rejected, and
there are now questions over whether it will exit the market by
selling its TIM Brasil subsidiary.
Vivendi has been adopting a strategy that positions itself away
from telecoms and focusses predominately on media and
entertainment, and the sale of GVT is said to be significant in
achieving that goal.
Telefónica’s offer includes €4.7
billion in cash and a 12% stake in the combined unit.
The deal, however, is likely to be scrutinised by the
country’s anti-trust body, given the
company’s increasing presence in the market.