Reports: Telefónica, Telecom Italia prepare GVT bidding war, as Oi eyes TIM Brasil

Telefónica and Telecom Italia are reportedly gearing up for a bidding war in Brazil, with both operators preparing to go head to head over Vivendi-owned broadband provider Global Village Telecom (GVT).

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Telecom Italia CEO Marco Patuano

At the same time, Brazilian operator Oi is understood to be considering an $8 billion (€6 billion) bid for a stake in rival operator TIM Brasil, which is around 67 per cent owned by Telecom Italia. Such a move could also put Oi--currently in the process of merging with Portugal Telecom--on a collision course with Vodafone Group, which is also rumoured to be interested in TIM Brasil.

Telefónica is understood to be in discussions about improving an earlier offer it made for GVT, in a move that would value the broadband unit at €8 billion ($10.6 billion), Bloomberg reported. A revised bid could come as early as this week, ahead of a Vivendi board meeting scheduled for Aug. 28.

Earlier in August, the Spanish operator launched an offer to buy GVT for a total value of €6.7 billion in order to create a "new" Telefónica Brasil and strengthen the Spanish group's position in the important Brazilian market.

Meanwhile, Telecom Italia is expected to make a bid for GVT that would value the unit at €7 billion. Like Telefónica, which is currently Telecom Italia's biggest shareholder, the Italian incumbent's offer would also include the option for Vivendi to end up with a stake in Telecom Italia. Telecom Italia is expected to discuss the bid at its board meeting on Wednesday, Reuters reported. The company's CEO Marco Patuano is understood to have previously met Vivendi chairman Vincent Bollore to discuss the deal.

For Telecom Italia, the benefit of a GVT tie-up lies in allowing it to sever ties with Telefónica and boost its Latin American operations by merging GVT with TIM Brasil. However, Berenberg Bank analyst Paul Marsch told Bloomberg that a failure to secure GVT could persuade Telecom Italia to sell TIM Brasil because it would then lack the scale to compete with its bigger rivals on the Brazilian market.

Brazil has long been a key battleground for Telecom Italia and Telefónica, which compete under the TIM Brasil and Vivo brands respectively. Telefónica's offer to sell part of its stake in Telecom Italia as part of a deal with Vivendi would also appease Brazilian regulator Cade, which has ordered Telefónica to either sell its shares in the Italian operator or dispose of Vivo. The regulator issued the order after Telefónica increased its holding in the Telecom Italia shareholder vehicle Telco last year.

For more:
- see this Bloomberg article
- see this separate Bloomberg article
- see this third Bloomberg article
- see this Reuters article

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