Telefónica bids $9B to acquire Brazilian telecom operator

The operator hopes to have a deal ready by September

Telefónica has submitted an offer for Brazilian telecom operator GVT (Global Village Telecom) worth €6.7 billion (US$9 billion), as it seeks to build up its business in Brazil by integrating mobile and fixed broadband with pay-TV services.

The Spanish operator's plan is to acquire the operator from its current owner, French media and telecom company Vivendi, and merge it with Telefónica Brasil. A combination of Vivo, the brand Telefónica uses in Brazil, and GVT would create the largest telecom operator in Latin America's largest market, the company said.

The offer is a mixture of cash and newly issued shares representing a 12 percent stake in Telefónica Brasil, after its combination with GVT. As an alternative, Telefónica is offering shares in Telecom Italia, now representing a stake of 8.3 percent. Unless Telefónica's offer is extended or accepted by Vivendi, it expires on Sept. 3.

Just like similar deals in Europe and the U.S., the driver is to create an operator that can offer mobile and fixed broadband and TV services using its own networks.

Vivo is the biggest mobile operator in Brazil and GVT offers high-speed broadband and pay-TV services. GVT's network is the most modern in the country, and includes one of the most extensive local access and long-distance fiber infrastructures, according to Vivendi.

Telecom operators and pay-TV providers around the world are facing increased competition from Internet-based services.

Shrinking revenues from voice and messaging thanks to competition from the likes of WhatsApp and Skype are forcing operators to look for new revenue streams. At the same time the battle for viewers is intensifying thanks to content from newcomers such as Netflix and Amazon.com.

Other operators seeking to build similar integrated businesses include British mobile operator Vodafone's acquisition of the Spanish cable operator Ono and Germany's largest cable operator, Kabel Deutschland, to complement its mobile activities in those countries. In France, cable operator Numéricable is hoping to buy mobile and fixed-line operator SFR, while in the U.S. AT&T plans to acquire satellite TV provider DirecTV.

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Tags business issuesCarrierstelecommunicationMergers and acquisitionsTelefónica

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Mikael Ricknäs

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