Cable MSO's Eyeing for GVT Assets - Analyst Blog
November 29 2012 - 7:15AM
Zacks
In an effort to increase their
presence in Brazilian markets, cable Multi Service Operators (MSO)
like DIRECTV (DTV), Liberty Global
Inc. (LBTYA) and telecom giant America
Movil (AMX) are all eyeing for Vivendi SA’s subsidiary
unit Global Village Telecom (GVT) – a Brazilian telecom
carrier.
These companies along with another
private equity firm have already proposed for an initial bid of
over €6 billion ($7.76 billion). Vivendi will review all the
proposals and will take the final call on early January, next
year.
We believe that the proceeds from
the spin-off of Global Village Telecom’s asset will benefit Vivendi
to reduce its debt.
GVT operates in 136 cities in
Brazil and offers fixed telephone, broadband and Voice over
Internet Protocol (VoIp) service to both business and normal
customers. Hence, the acquisition of GVT by these MSO’s will not
only gain market traction but will also help these companies to
counter stiff competition that exist in the emerging Brazilian
markets.
In the last nine months, GVT’s
newly launched pay-TV service has gained 312,000 subscribers and
also dominates 15.2% of Brazilian pay-TV market share.
So, DIRECTV, which is one of the
leading satellite TV service providers in Brazil is considering GVT
as a threat, which we believe may have led them to bid for the
company.
Similarly, America Movil is rapidly
expanding its pay-TV service across the Latin American countries
with the acquisition of Pay-TV firm Net Servicos – the largest
multi-service cable company in Latin America. Brazilian market
happens to be one of the profitable markets for the company after
Mexico.
Last year, America Movil acquired
StarOne S.A. (a satellite services provider in Brazil). So, further
acquisition of GVT’s business will not only consolidate its pay-TV
business in the Brazilian market but will also help them to gain
GVT’s 8.178 million fixed line subscribers.
We are currently maintaining our
long-term Neutral recommendation on DirecTV, Liberty Global and
America Movil.
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
LIBERTY GLBL-A (LBTYA): Free Stock Analysis Report
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