Telefonica beat Telecom Italia to the punch today, announcing it has agreed to a deal to acquire Global Village Telecom (GVT), Vivendi’s Brazilian broadband operation. The move positions Madrid-based Telefonica to vie for the dominant position in the booming Brazilian market, where it will face off with America Movil and Oi SA, among other smaller players.
America Movil has about 32% of the broadband market share in Brazil, Telefonica will have 30% and Oi SA 27% when the deal closes sometime in the first half of 2015. Telefonica plans to merge the business into its existing Vivo mobile and broadband services.
Although the he multifaceted deal which took nearly a month to craft is valued at $9 billion, Vivendi will receive only $6 billion in cash, but also gets a 7.4% stake in Telefonica’s Brazilian operations worth about $2.8 billion an 5.7% of Telecom Italia, which is valued at close to $1.3 billion, Vivendi said.
The new Telefonica 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, Telefonica said.
Brazil has been a hot market, especially in the OTT realm where it has an estimated 1.7 million viewers, a 51% increase in the past year.
The country has seen a massive influx of broadband users in recent years the broadband total grew 55% in 2013 alone; about 10% of Brazilians have a fixed broadband connection. But, nearly 40% of its urban households are hooked into high-speed Internet.
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