Vivendi makes play to diversify its international fortunes

French telecom and media conglomerate Vivendi SA submitted a $2.9 billion offer for wireline service provider Brazil's GVT Holdings. The proposed deal represents a company-wide effort to expand Vivendi's presence in high-growth international markets. Vivendi, which owns a major stake in fixed-line provider SFR, has seen its wireline revenues shrink in recent years as a result of wireless substitution.

There's plenty to like about Brazil's telecom market. Dominated by Spain's Telefonica, Pyramid Research's recent Country Intelligence Report on Brazil said that fixed and mobile telecom revenues were $55.8 billion in 2008 and are forecast to grow 2.9 percent annually to $64 billion by 2013. GVT emerged as an alternative service provider in 2000 and currently serves customers in 72 cities throughout Midwestern and Southern Brazil, in addition to a swath of Northern states. Now that the Brazilian government has opened its telecom market to competition, GVT should be able to steal market share from other service providers throughout the country.

Jean-Bernard Levy, Vivendi's CEO, said in an interview with the Wall Street Journal that it will focus its attention on expanding GVT's wireline business with no plans to build out a mobile network. Still, analysts expressed concern that Vivendi is not only taking a risk by focusing on wireline as more Brazilian consumers are increasingly turn toward wireless, but that it also may be paying too much for GVT. "GVT looks like an attractive operator with strong growth potential, but the price Vivendi is ready to pay seems quite high," Exane BNP analyst Charles Bedouelle said in a research note.    

For more:
- Wall Street Journal has this article
- Unstrung has this analysis

Related articles
Broadband Forum: Americas see upswing in broadband subscriptions
Report: Latin and South American VoIP revs to hit $10.2B in 2014

Suggested Articles

Microsoft does not report exact revenue amounts for Azure, but it said Azure revenue grew 64% in the latest quarter compared to the previous year.

U.K. broadband provider CityFibre is targeting 14 more cities for its all-fiber gigabit service.

While Cisco has embraced the concept of disaggregation, service providers need to carefully consider how they will implement it.