GVT/Telefonica expected to have minimal conditions; Vivendi could take up Telecom Italia stake
The potential sale of Brazilian fixed line telco GVT to Telefonica [NYSE:TEF] is not expected to receive major conditions from Brazil’s regulatory authorities, and Telefonica plans to exit its Telecom Italia [ITA:TI] shareholding after the deal, according to newswire reports.
The merger review is relatively uncomplicated because GVT, which operates broadband networks, fixed telephony and pay TV, does not own licenses to operate mobile services, a Portuguese-language Reuters item noted, citing an source familiar with the matter. Therefore, there would be no frequency overlap with mobile operator Vivo, controlled by Telefonica Brasil [BVMF:VIVT4].
Competition concerns may demand more attention, the source continued, noting the potential for increased concentration is at its highest in Sao Paulo, where Telefonica offers services which are also offered by GVT.
Telefonica’s acquisition of GVT would be reviewed by Brazil’s telecommunications regulator Anatel and Brazil’s antitrust authority CADE, the source added.
A separate report by the same newswire cited Telefonica Chairman Cesar Alierta's comments at a telecoms conference, to the effect that the Spanish company does not "want to stay" invested in its Italian rival.
Telefonica has recently begun reducing its stake in Telecom Italia, which would come to 5.3% of its shares and 8.3% of its voting rights upon the conversion of a three-year bond. When Telefonica and Vivendi [NYSE:VIV] entered into exclusive talks over the GVT sale last week, it offered those rights as part of its offer, and sources said Vivendi is likely to take up this offer.
Telecom Italia had also attempted to bid for GVT, and the newswire flagged it as a suddenly vulnerable target in a rapidly consolidating sector.