Telefonica is preparing a bid for GVT, one of the largest operators of broadband and pay TV in Brazil, as reported in today’s edition of the Spanish newspaper Expansion. According to the report, the integration of the Brazilian group, controlled by France’s Vivendi, considerably strengthen Telefonica’s strategy in the convergence market, that is, the combined offering of fixed and mobile services in the Brazilian market.
The operation would be particularly beneficial outside Sao Paulo, as GVT has a presence in over 160 Brazilian municipalities.
In addition to the purchase, which could cost 7,000 million euros, Telefonica would prevent GVT be integrated with TIM, the mobile subsidiary of Telecom Italia, Telefonica is the main shareholder.
The combination of Telefonica Brazil and GVT would create “the largest telecom operator in the largest market in Latin America, providing a unique platform for the generation of synergies and value creation”.
Telefonica’s intention is to integrate the operation with a group that would improve their position in the market for fixed broadband in Brazil, especially outside of Sao Paulo, in order to strengthen the presence of the Spanish in the business of integrated communications or converging fixed and mobile, which still has not been developed in Brazil as well as in Europe, although it is an unstoppable trend worldwide.
With the integration of GVT, Telefonica also clearly would strengthen its position in the business of pay TV, a sector that has become vital to Telefónica in Brazil dominated by its main rival: America Movil. Thus, an integration of the two groups would give Telefonica third in the pay television market, with 1.48 million customers and a 7.8% market share and raise broadband from 19% to 31%.