Telefonica this week cleared the final hurdle to its acquisition of Brazilian broadband operator GVT after receiving approval from local antitrust watchdog CADE.
The clearance, granted on Wednesday, paved the way for the Spanish incumbent to name a new chief executive of Telefonica Brasil and commence a €3 billion capital increase to help fund the deal.
"The integration of GVT makes Telefonica the leading digital telco in the country. With over 100 million accesses, the combined Telefonica Brasil will be the number one operator in the market in terms of customers and revenues," said Telefonica, in a statement.
The company has named current GVT chief executive Amos Genish as CEO of the combined entity. His appointment will become effective once the deal closes, which is expected to happen in the first half of this year.
"Amos Genish has an excellent track record as a founder and leader of GVT for the last 15 years. He has transformed GVT into an agile, customer centric and performance-based culture company. In the new Telefonica Brasil, he will be responsible of bringing the best from Vivo and GVT, resulting in high levels of performance and employee engagement," Telefonica said.
Telefonica Brasil chairman Antonio Carlos Valente will remain in his post, while Paulo César Teixeira, CEO of Telefonica’s mobile operation Vivo, will leave the company.
Telefonica agreed to buy GVT from Vivendi in September for €4.66 billion in cash and a 12% stake in Telefonica Brasil. The deal received approval from Brazil’s telco regulator Anatel in late December.
To help fund the takeover, Telefonica has unveiled plans to raise €3.05 billion by issuing 281.2 million ordinary shares with a subscription fee of €10.84 per share. Telefonica did not name the banks it is working with, but according to a report earlier this week by Reuters, nine are involved, led by UBS, Morgan Stanley and JP Morgan.
Earlier this week, Telefonica also formally waived its voting rights in Telecom Italia, which was one of the conditions of Anatel’s approval of the GVT deal.
The integration of GVT with Telefonica creates a strong competitor with both fixed and mobile capabilities, something that rivals Claro and Oi can also lay claim to, but not Telecom Italia’s local unit TIM Brasil.
Telecom Italia CEO Marco Patuano has insisted that TIM Brasil is a strategic asset, one that can survive as a mobile-only player for the next five years.
With Telefonica’s GVT deal set to close by the end of June, Patuano’s confidence and resolve will soon be put to the test.
