French media group Vivendi announced yesterday that it has entered into exclusive talks to sell its Brazilian broadband, pay-TV and fixed telephony operator Global Village Telecom (GVT) to Telefonica for USD9.83 billion. The decision, which was taken after a brief board meeting to review offers on the table, puts the Spanish giant in the driving seat ahead of rival Telecom Italia (TI) which had entered into a bidding war for the Brazilian firm. With Telefonica presenting the highest offer for GVT, the French group issued a statement confirming that the three-month exclusive talks will now run until 28 November. ‘The decision was easy: Telefonica’s was clearly the better offer,’ a person familiar with the matter is quoted as saying.
Divesting GVT marks the final phase of Vivendi’s exit from the telecoms market and it looks to raise money to invest in its core media and content businesses. It has already sold French mobile operator SFR for USD23 billion in April this year, and finalised the sale of its Moroccan business in May.
Earlier this month, CommsUpdate reported that Telefonica had launched a EUR6.7 billion (USD9 billion) bid for GVT, as it looks to continue its expansion in Brazil and address antitrust concerns in the country. Under the original offer, the French media group was set to receive BRL11.96 billion (USD5.3 billion) in cash and shares in Telefonica’s Brazilian unit – branded Vivo – along with rights to purchase a roughly 8% stake in TI from the Madrid-based operator, in a move that would effectively reduce Telefonica’s strength in Brazil’s cellular market. The Spanish group is struggling to comply with a December 2013 regulatory ruling in Brazil that has questioned its role as a shareholder in TI – which owns Brazil’s second largest carrier TIM Participacoes (TIM Brasil). Industry watchers note that a move by Telefonica to reduce its influence in Italy and simultaneously strengthen its Brazilian fixed line business via a tie-up with GVT makes sense.