BARCLAYS
- Battle for control of GVT now looks to have concluded
- Tim Brasil likely to be competitively disadvantaged in L/T; mgmt. will come under pressure to consider selling the asset
- Tim Brasil may be too large an acquisition for one co., meaning a breakup could be more feasible
- At 10.2x 2014 EV/Ebitda, deal valuation looks full, although TEF should be able to realize cash-cost synergies of 3%-5% of GVT’s base
- There is potential for material revenue synergies over the medium-term
- VIV’s interest in acquiring a stake in Telecom Italia likely driven by potential M&A upside in Italy/Brazil
- Post GVT sale, VIV has scope to return a further EU4.5b to shareholders, on top of the EU3.5b already announced
- VIV’s 1H results were a “non-event”
- TEF has paid a high price to acquire GVT
- TEF likely to dispose of some of GVT’s assets in Sao Paolo, with Oi the logical buyer
- Upside for TI now dependent on entering partnership with Oi
- NOTE: TEF sees deal synergies with NPV of at least EU4.7b
- NOTE: TI will continue to look at industrial projects