Telefônica reaches preliminary accord with Brazil's Cade over GVT

Telefônica reached a preliminary agreement with Brazilian competition watchdog Cade over its planned acquisition of local fixed operator GVT, after telecoms regulator Anatel cleared the deal in December.

The terms of the agreement remain confidential until the final decision is made, which is due no later than 240 days after the merger was reported on Nov. 17, 2014.

The board of Cade is to decide whether to accept the findings of a preliminary technical report that said the telecom companies had agreed "to adopt measures to effectively assure supply, quality and competitive prices for fixed-line telephone, broadband internet and pay-TV markets."

The anti-monopoly regulator previously had concerns that the merger would lead to a concentration of operations in São Paulo, but said competitive analysis has indicated that a risk of price increases driven by the acquisition is unlikely.

Cade added that the companies have also agreed to adopt remedies to eliminate competition concerns in the mobile market.

Telefónica agreed to acquire Vivendi's Brazilian broadband business GVT for just over €7 billion ($8 billion) in cash and stocks last September. As well as receiving €4.6 billion in cash, Vivendi will also receive 7.4 per cent of Telefónica Brasil shares at a stock market value of €2.02 billion, and 5.7 per cent of Telecom Italia shares at a value of €1.01 billion.

At the time, the GVT decision placed Telecom Italia in a precarious position in the Brazilian market after reports said local operator Oi was eyeing an acquisition of Telecom Italia's local business, TIM Participacoes. In turn, Telecom Italia has since been given board clearance to explore a tie-up between TIM Participacoes and Oi.

Also on Friday, Telecom Italia said it would invest over €4 billion in Brazilian 3G and 4G coverage in the next three years as part of a overall group investment plan of €14.5 billion.

For more:
- see this Cade release (in Portuguese)

Related Articles:
Telecom Italia cleared to pursue deal with Brazil's Oi
Telefónica seals deal to acquire GVT from Vivendi
Report: Telecom Italia values TIM Brasil stake at €13B
Vivendi enters into exclusive talks with Telefónica on GVT
Telecom Italia offers €7B for GVT as Telefónica ups bid

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