It was only a matter of time before Telefonica would pick a fight with Vivendi for Brazil's competitive wireline provider GVT. Telefonica's Brazilian Telesp division has now put a $27.20 per share offer on the table for GVT. This offer is designed to trump French conglomerate Vivendi's $24.02 per share offering proposed in September. A Vivendi spokesman said that the company is in the final stages of doing its due diligence and is going to recommend that its board vote to approve the deal when they meet later this month.
And while some analysts believe Telefonica's offer is too high, the Spanish telco believes that offering a higher price is the only way it will be able to prevent Vivendi from becoming a major player in the Latin American telecom market. It's a great time to establish more presence in the Latin American telecom market. Not only is the economy growing, but Rio de Janeiro will host the 2016 Olympic games so the need for enhanced mobile and broadband services will become more pressing.
Establishing a foothold in the Latin American market reflects Vivendi's desire to expand its presence outside of its European territory by purchasing properties in developing markets. Increased competition and regulatory constrictions have slowed the growth of Vivendi's European telecom operations.
However, any proposed deal from either Vivendi or Telefonica will have to gain approval of not only GVT's board, but also Brazils telecom regulatory body.
- xChange has this article
- Wall Street Journal also has this analysis
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