If Vivendi (Paris: VIV.PA) is interested in selling its Global Village Telecom (GVT) Brazilian phone company, DirecTV (Nasdaq: DTV) is interested in bidding for it as a way to bolster its already strong Latin American presence, two sources familiar with the matter have said.
According to a Bloomberg report, Vivendi is setting up a list of those interested in bidding on the formerly untouchable and still money-making telco. Those on the list will then have access to GVT's financial data to mull a potential bid on its assets. It's all very tenuous; the talks are private and a deadline for a first round of bids hasn't been set. Vivendi did hire Rothschild and Deutsche Bank (NYSE: DB) to study what to do about GVT—perhaps a sale, perhaps a public offering, sources have said.
Still, DirecTV appears to be on the inside track to at least bid on the deal, even though spokesman Darris Gringeri joined a Vivendi spokesman in declining to comment.
DirecTV would be a logical candidate for the telco because its U.S business seems to be flattening. The satellite operator for the first time lost customers in the United States last quarter but saw its Latin American base climb by 36 percent year-over-year.
And then there's the high-speed Internet access--part of GVT's business that DirecTV has to find attractive. Since last year, DirecTV has been offering high-speed data access over a wireless network in Brazil, and in a June government auction it bought the rights to use regional airwaves for Internet.
GVT, which Vivendi bought in 2009 for $4.18 billion, won't come cheap. Vivendi is making money on the telco and estimates are it's now worth about $6.4 billion. The only real reason it's even being considered for sale is that Vivendi is apparently in some financial difficulties. Vivendi stock fell to a nine-year low in April and its debt rating is in danger.
New Vivendi Chairman Jean-Rene Fourtou, who took over after CEO Jean-Bernard Levy was ousted in June, is looking for ways to reduce the company's emphasis on telecommunications business because he thinks they lack scale and require too much investment, those inevitable "people familiar with the matter" said in June.
- Bloomberg has this report
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