Telefonica Board Said to Discuss Improving GVT Bid This Week

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Telefonica SA (TEF)’s board plans to discuss raising its offer for Vivendi SA (VIV)’s GVT, valuing the Brazilian broadband unit at as much as 8 billion euros ($10.6 billion), according to a person with knowledge of the matter.

The revised bid could be presented ahead of Vivendi’s scheduled board meeting on Aug. 28, and before Telecom Italia SpA (TIT) formalizes a rival offer, the person said, asking not to be identified because the deliberations are confidential. A representative for Madrid-based Telefonica declined to comment.

Telefonica this month offered 6.7 billion euros, mostly in cash, in a proposal to combine its own Brazilian phone business with GVT. Telecom Italia is preparing a counterbid valued at as much as 7 billion euros to merge GVT with its Tim Brasil division, people with knowledge of the plan said last week. GVT would be a source of growth for the suitors as phone-service revenue drops in Spain and Italy amid intense competition.

“It makes a lot of sense for Telefonica to push it if they feel that letting Telecom Italia get hold of GVT might close the door on a Brazilian mobile consolidation angle,” said Paul Marsch, an analyst at Berenberg Bank. “My sense is that is at least partly what is at play here.”

No final decision has been made, and Telefonica’s board could decide to stick with its current offer, the person said.

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Telecom Italia erased earlier gains, trading 0.2 percent lower at 84.1 euro cents at 10:08 a.m. in Milan. Telefonica slipped 0.1 percent to 12.02 euros in Madrid. Vivendi dropped 0.5 percent to 19.70 euros in Paris.

Vivendi, the French conglomerate that has sold telecommunications assets the past two years to focus on media, beat Telefonica to acquire GVT in 2009. GVT, which emerged a decade earlier during the privatization of Brazil’s telecommunications industry, had 12 percent of the country’s broadband market and about 9 percent of its landline market in 2013, according to Vivendi’s annual report.

Cesar Alierta, Telefonica’s executive chairman, may meet Vivendi Chairman Vincent Bollore today to present the improved offer for GVT, Il Sole 24 Ore reported today, without citing anyone.

Telecom Italia’s board is scheduled to tomorrow to discuss its GVT bid. Vivendi will report earnings after market close on Aug. 28. It said on Aug. 5, after Telefonica’s initial bid, that none of its units are for sale, though its board would consider Telefonica’s offer.

Source: Bloomberg