Telefónica finalises €4.7bn GVT acquisition

Telefónica and Vivendi have signed the final agreement for the sale of Global Village Telecom, GVT, to Telefónica, a move that reinforces the Spanish telco’s leadership in Brazil, and is expected to generate synergies of at least €4.7 billion,

Both companies agreed August 29 to enter into exclusive negotiations for this transaction, which includes a cash consideration of €4.663 billion as well as a payment in shares representing 12.0 per cent of the share capital of Telefónica Brasil, after its integration with GVT.

As part of the agreement, Vivendi has accepted Telefónica’s offer to acquire 1.11 billion ordinary shares held by Telefónica in Telecom Italia, currently representing 8.3 per cent of Telecom Italia’s voting share capital (corresponding to 5.7 per cent of its total share capital), in exchange of 4.5 per cent of Vivendi’s capital in the company resulting from the integration between Telefónica Brasil and GVT.

The cash payment for this transaction will be financed via a capital increase at Telefónica Brasil, which Telefónica S.A. will subscribe in proportion to its current stake of 74 per cent in its Brazilian subsidiary and will fund, in turn, via a capital increase.

The operation will generate synergies of at least €4.7 billion. The new Telefónica Brasil resulting from the integration will enhance its leadership as the country’s integrated telecommunications operator, leader in both the mobile and broadband segments, with national coverage and an increased exposure in the high value segment. The transaction allows Telefónica to enhance its positioning in one of its key markets and improve its growth profile and financial flexibility.

GVT owns a large new generation network with over 10.4 million homes passed in 21 Brazilian states and more than 2.5 million broadband customers, most of them located outside of São Paulo.

The final closing of the operation is subject to obtaining the relevant regulatory authorisations.

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