Vivendi has made its choice, and the auction for Global Village Telecom has gone to Telefonica. Both Telefonica and Telecom Italia had been bidding for the Brazilian telecommunications company back in August, seeking to combine the fixed line operator’s assets with their mobile businesses in the country.
Telefonica will be paying some €7.24B in all, of which €4.21B will be in cash and the rest derives from a 7.4% stake in Telefonica’s Brazilian business, and a 5.7% stake in Telecom Italia. Brazil’s market has been a big focus for European telecommunications firms looking to consolidate their various holdings. The deal will take Vivendi further from telecom, a world it has been divesting itself of in recent years. They’ll still have minority stakes in Telefonica’s Brazilian unit and in Telecom Italia.
Telefonica expects to derive synergies of at least €4.7B from the integration. The approximately 30% marketshare they’ll hold in the overall Brazilian telecom marketplace will give them the bulk to compete against Carlos Slim’s America Movil, which also has operates fixed line and wireless operators in the country: Claro and Embratel.
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