Telefónica finally completed the 100 per cent acquisition of fixed-line operator GVT from Vivendi, saying it has now become the largest integrated telecommunications company in Brazil in terms of both revenue and customers with over 105 million subscriptions.
The Spain-based company said the final hurdle was cleared following the formal approval by shareholders of Telefónica Brasil, which sells mobile services under the Vivo brand. The deal had already won approval from Brazil's anti-trust agency Cade and telecoms regulator Anatel.
Under the terms of the purchase agreement, Vivendi will receive €4.6 billion ($5.1 billion) in a cash and debt settlement as well as a 12 per cent stake in Telefónica Brasil following the integration of GVT with Vivo. In the coming weeks, Vivendi will exchange 4.5 per cent of this interest for 8.3 per cent of the ordinary shares of Telecom Italia, making it the largest shareholder in the Italian operator.
In a connected development, Bloomberg also reported that Argentina's competition regulator CNDC has approved the break-up of Telco, clearing the way for Vivendi SA to take the Telecom Italia stake.
Telco was set up in 2007 as a shareholder pact representing a 22.4 per cent stake in the Italian operator. In 2014, shareholders agreed to demerge the pact to enable them to sell their shares in Telecom Italia. Telefónica was the leading investor in the vehicle, meaning that both Brazilian and Argentine regulators had a say in Telco's ownership structure because of concerns about domestic competition between Telefónica and Telecom Italia.
Other Telco shareholders, Assicurazioni Generali, Intesa Sanpaolo and Mediobanca, may now also sell their shares.
For Telefónica, the approval of both the Telco break-up and the GVT purchase mean it is now free to pursue its ambitions on the Latin American market after a protracted and complicated process.
"By purchasing GVT, Telefónica is reaffirming its commitment to Brazil, where it has invested nearly €55 billion since it first ventured into the country in 1996, and which is currently the source of nearly a fourth of the group's revenue," the operator said.
For Telecom Italia, it swaps one major foreign shareholder for another. Giuseppe Recchi, the chairman of the Italian operator, recently said he welcomed foreign investors in the group.
"We reject the logic that foreign investments in Telecom Italia are dangerous: whoever brings capital and know-how contributes to make our company stronger, regardless of whether the investor is Italian or a foreigner," Recchi said, according to Reuters.
Telecom Italia also competes with Telefónica in Brazil under TIM Participacoes (TIM Brasil) and had been given board clearance to explore a tie-up between TIM Brasil and Brazilian operator Oi. However, little more has been heard on the matter since then.
- see this Telefónica release
- see this Bloomberg article
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