Telefonica is planning a €3 billion capital increase to help fund its acquisition of Brazilian broadband operator GVT, it emerged this week.
An announcement could come as early as next week, Reuters reported on Thursday, citing a source familiar with the situation.
The Spanish telco is working with nine banks on the capital hike, the newswire said. UBS, Morgan Stanley and JP Morgan will lead it.
Telefonica agreed to buy GVT from Vivendi in September for €4.66 billion in cash and a 12% stake in Telefonica Brasil. Reuters puts the total value of the deal at around €7.2 billion.
At the time it said it would undertake a capital increase to fund the cash portion of the deal.
In February the telco told Bloomberg that it could reduce the size of the capital hike to below €3.4 billion by using the proceeds from the planned sale of its O2 unit in the U.K.
Hutchison Whampoa in January entered exclusive talks with Telefonica to acquire O2 in a deal worth £10.25 billion (€14 billion). If the acq uisition goes ahead, the Hong Kong company will merge O2 with its 3UK unit.
The operators have shared few details on the progress of the negotiations since then.
However, Telefonica is pushing ahead with the GVT deal.
Brazilian regulator Anatel approved the acquisition in December and gave the green light to a second phase – including the transfer of a stake in Telecom Italia to Vivendi – last week.
