Published on: 21st Sep 2014
Spain’s Telefonica has boosted its Brazilian presence, with the purchase of Global Village Telecom (GVT) from Vivendi.
The deal, which was already expected to take place is worth around EUR4.66 billion and also leaves Vivendi with a 12 percent stake in the merged Brazilian company.
As part of the agreement, Vivendi has accepted Telefónica’s offer to acquire 8.3% of Telecom Italia’s voting share capital, in exchange of 4.5% of Vivendi’s capital in the company resulting from the integration between Telefónica Brasil and GVT.
In total, Vivendi is getting EUR4.66 billion in cash for GVT, and EUR3.03 billion in shares in Telecom Italia and the enlarged Telefonica Brasil — giving the deal a net worth of around EUR 7.69 billion.
Vivendi will also be liable for tax (including on capital gains) estimated at around EUR500 million.
The cash payment for this transaction will be financed via a capital increase at Telefónica Brasil, which Telefónica. will subscribe in proportion to its current stake of 74% in its Brazilian subsidiary and will fund, in turn, via a capital increase.
The operation is expected to generate cost savings of at least EUR 4.7 billion.
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 Sao Paulo.
Closing of the deal is expected by the middle of next year.