2nd UPDATE: Telefonica Brazil Unit In $3.7 Billion Bid For GVT
October 07 2009 - 12:13PM
Dow Jones News
Telefonica SA (TEF), Spain's largest telecommunications company
by market value and customers, Wednesday made an all-cash bid for
Brazilian telecommunications company GVT Holding SA (GVTT3.BR) that
could amount to a total investment of around $3.7 billion,
potentially trumping an earlier offer from France's Vivendi SA
(VIV.FR).
In a filing to the Spanish market regulator, Telefonica said its
Brazilian Telesp unit would offer 48 Brazilian reals ($27.20) a
share for GVT, topping the BRR42 a share offer made by Vivendi
Sept. 9.
Brazil is a lucrative market for telecommunications operators
due to its rapidly expanding economy, large population and
relatively-low mobile and broadband penetration rates compared with
mature markets in Europe or the U.S.
"The price Telefonica is offering seems too high, but if Vivendi
gained a foothold in Brazil, this would be a blow and is best
avoided," said Norbolsa analyst Adrian Serrano.
A Vivendi spokeswoman said she wasn't immediately able to
comment on Telefonica's offer for GVT. Vivendi had looked to Brazil
as part of its strategy to invest in fast-growing emerging markets.
The Paris-based company, which owns record company Universal Music
and videogame maker Activision Blizzard, also owns about 50% of
Maroc Telecom SA of Morocco.
Telefonica said the offer was contingent on it acquiring 51% of
GVT's shares and the Brazilian regulator approving the deal.
"GVT would expand our footprint in Brazil and is complimentary
to our existing operations," a Telefonica spokesman said.
Telefonica already operates fixed line and broadband provider
Telesp, but its presence is limited to the state of Sao Paolo. GVT
is an alternative operator that started business in 2000 and
operates in Brazil's Midwest and Southern regions, as well as some
Northern states. GVT has around 2.3 million customers and had sales
of $800 million last year.
Telefonica also operates Brazilian mobile operator Vivo with
Portugal Telecom SGPS SA (PT) and has relied increasingly on the
strong revenue growth in its Latin American markets as the economic
downturn hits its mature markets in Europe, especially in
Spain.
At 1523 GMT, Telefonica shares traded 1.6% lower at EUR19.04,
lagging the overall Spanish market.
Company Web site: www.telefonica.com
-By Jason Sinclair, Dow Jones Newswires, 34 913958127,
jason.sinclair@dowjones.com
(Alastair Stewart, Ana Garcia and Ruth Bender contributed to
this article.)