Telefonica step into Brazil market for €7.45bn

SPANISH telecom giants Telefonica have won the battle with Telecom Italia for the sale of French company Vivendi’s Brazilian broadband unit GVT.

Telefonica aims to incorporate GVT into their Brazilian mobile phone network Vivo, using GVT’s pay-TV and broadband services to compete for higher-value customers and keep profits growing as mobile subscriber growth begins to plateau in the world’s fifth most populous country.

“The Telefonica offer best meets the group’’ strategic and financial objectives,” said the French company.

Vivendi will receive 4.66 billion euros in cash from Telefonica, which boosted the cash element of a previous bid to see off Telecom Italia.

On top of the cash, Vivendi will receive a 12 per cent stake in the combined Vivo-GVT merger, of which about one third could be exchanged for a 5.7 per cent stake in Telecom Italia if Vivendi prefer. Telefonica is Telecom Italia’s largest shareholder but the two have a tense relationship as they compete against each in various sectors.

Getting hold of GVT was crucial for both Telefonica and Telecom Italia since European markets have been shrinking over the past few years amidst fierce price competition.