Spain's Telefonica has made a €6.7 billion bid to France's Vivendi for its Brazilian broadband unit GVT, seeking to strengthen its position in a market that accounts for a fifth of revenue.

The surprise move comes after Vivendi, led by its chairman and largest shareholder Vincent Bollore, said in late June it wanted to keep its last remaining telecom asset despite repositioning itself as a media firm.

The French company said that none of its units was for sale but it would consider Telefonica’s offer at its next board meeting at the end of the month.

Analysts, however, have speculated that Bollore would be open to shedding GVT at the right price, and say Telefonica’s bid is likely to attract additional suitors for Brazil’s fourth-biggest broadband provider.

Telefonica, which owns Brazil's leading mobile operator, Vivo, said its offer consisted of an 11.96 billion Brazilian reals (€3.9 billion) payment in cash plus new shares to be issued in Telefonica Brasil worth 12 per cent of the larger group.

Telefonica also offered Vivendi the chance to acquire its 8.3 per cent stake in Telecom Italia. If accepted, this would help solve the thorny anti-trust problem Telefonica has in Brazil, where regulators have ordered it to resolve the fact it owns Vivo and, indirectly, part of Telecom Italia's Brazilian mobile operator TIM Participacoes.

Moody credit analyst Carlos Winzer said Telefonica would not need additional debt, since the deal would be financed by a capital increases at the Brazil subsidiary and group level.

“The deal also makes a lot of industrial sense . . . since it would strengthen Telefonica position in Brazil and prevent a competitor from buying GVT.”

A purchase of GVT would help the Spanish operator bulk up in fixed telephony and broadband where it is in third place in Brazil with an 18.4 per cent share behind America Movil and domestically-owned Grupo Oi. GVT is fourth place with a 12.7 per cent share.

– (Reuters)