Telefonica on Friday announced that it has closed the acquisition of Brazilian broadband operator GVT and declared itself the country’s leading integrated operator in terms of both customer numbers and revenues.
In accordance with the terms of the deal it brokered with GVT’s former parent Vivendi last year, Telefonica paid €4.66 billion in cash and the assumption of debt for the business, in addition to 12% of the merged entity’s share capital.
In the coming weeks Vivendi will exchange just over a third of that stake – 4.5% – for 8.3% of Telecom Italia’s ordinary shares, currently held by Telefonica.
According to Vivendi, the whole deal values GVT at €7.5 billion, based on the current valuations of Telefonica Brasil and Telecom Italia’s shares.
Vivendi said it will receive €4.2 billion before tax from the sale. It estimates the tax at €600 million.
Shareholders of Telefonica Brasil approved the deal on Thursday. At the same time, the shareholders confirmed the appointment of Amos Genish as CEO of the enlarged company, his priority being to oversee the integration between Telefonica, which operates as Vivo in Brazil, and GVT.
The shareholder vote came after Brazilian antitrust watchdog CADE gave its approval to the takeover in March. Telecoms regulator Anatel okayed it late last year.
The deal also required approvals in Argentina. According to Reuters, which has had sight of a relevant document, Argentina’s CNDC approved the break-up of Telco, the shareholder group set up to control Telecom Italia, clearing the path for Vivendi to become a shareholder in the Italian incumbent. The Argentine competition watchdog had a stake in proceedings because of ongoing cross-ownership issues related to Telefonica’s status as a Telecom Italia shareholder; the pair compete in Argentina.
Back in Brazil, Telefonica is upbeat about the growth potential of the market, which contributes almost a quarter of its group revenue. The combined Vivo/GVT entity has 105 million fixed and mobile accesses in Brazil.
"Telefonica Brasil now has national coverage and is the unchallenged leader in the mobile business and fixed ultra-broadband, while also strengthening its position in pay TV," Telefonica said, talking up the complementary nature of the two businesses.
Vivo’s 3G network reaches 3,200 Brazilian municipalities and its 4G services are now available in 40 cities, while GVT’s fibre network covers 156 cities.
