LONDON – A bidding war has broken out for Vivendi's telecommunications operations in Brazil as rivals Telefónica of Spain and Telecom Italia made competing offers for the business on Thursday.
Earlier this month, Telefónica offered to pay about $8.9 billion in cash and shares for Global Village Telecom with an eye toward combining it with its mobile and broadband operations in Brazil, which operate under the Vivo brand.
On Thursday, Telefónica sweetened its bid to about $9.8 billion after Telecom Italia, one of its main rivals in Brazil, offered to pay a combination of cash and shares that valued the business at 7 billion euros, or about $9.2 billion.
Telecom Italia wants to combine G.V.T. with TIM Participações, which it controls.
Vivendi's board will examine both offers later Thursday. Telefónica's sweetened offer expires on Friday.
The offers by Telefónica and Telecom Italia come a day after the Brazilian telecom provider Oi said that it had hired the investment bank Banco BTG Pactual to explore alternatives to acquire Telecom Italia's controlling stake in TMI.
"Oi will keep its shareholders and the market informed of any material events," the company said in a regulatory filing on Wednesday.
A deal for G.V.T. would be the latest in a wave of consolidation as Telefónica and other European carriers swap assets in hopes of attracting more customer dollars by offering bundled mobile, land-line, broadband and television services.
In July, European antitrust regulators signed off on Telefónica's long-awaited acquisition of Germany's smallest mobile operator, E-Plus.
That deal, worth €8.6 billion, would combine the third- and fourth-largest cellphone providers in Germany and create a rival on par with T-Mobile and Vodafone, which together control more than half of the mobile phone market in Germany.
As part of its sweetened proposal, Telefónica would pay €4.66 billion in cash and give Vivendi a 12 percent stake in its Brazilian operations. About one-third of those shares could be exchanged at Vivendi's discretion for 5.7 percent of the share capital and 8.3 percent of the voting rights of Telecom Italia.
Telefónica, based in Madrid, recently announced plans to sell convertible bonds in Telecom Italia worth about 750 million euros, or $1 billion, to reduce its stake in the Italian company and appease Brazilian competition regulators.
For its part, Telecom Italia has offered to pay €1.7 billion in cash and to give Vivendi a 15 percent stake in its Brazilian operations and a stake worth 16 percent of the share capital and 21.7 percent of the voting rights of the Italian company.
Telecom Italia would hold about 60 percent of the combined TIM and G.V.T. post merger. Its offer expires in September and would require shareholder approval.
Brazil is an important market for both companies.
Telefónica's Brazilian operations are a main driver of its business in Latin America, accounting for 42 percent of its revenue in the region last year. The company's Brazilian business posted revenue of €12.2 billion in 2013.
As of the end of June, Telefónica had about 95 million customer access accounts in Brazil, primarily driven by mobile customers.
Telecom Italia's Brazilian operations have more than 73.4 million customers and annual revenue of about €7 billion, the company said.
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