Final agreements for the sale of Global Village Telecom to Telefonica have been made between two companies.

Telefonica S.A. and Vivendi have finalized the sale of Global Village Telecom, GVT, to Telefonica. Both companies have reached an agreement on the 29th of August to enter into exclusive negotiations for this transaction. This acquisition includes a cash consideration of 4,663 million euros plus payment in shares representing 12.0% of the share capital of Telefonica Brasil.

Vivendi, as a part of the deal, has also accepted Telefonica’s offer to acquire 1,110 million ordinary shares held by Telefonica in Telecom Italia, currently representing 8.3% of Telecom Italia’s voting share capital in exchange of 4.5% of Vivendi’s capital in the company. This clearly results in the integration between Telefonica Brasil and GVT.

Experts in the telecommunication industry predict that this acquisition will generate synergies of at least 4,700 million euros. Telefonica Brasil results from this integration and this enhances industry leadership as the country’s integrated telecommunications operator. Telefonica Brasil will be the giant in both the mobile and broadband services, with amazing national coverage. Finally, Telefonica will be able to enhance its positioning and improve its growth profile and financial flexibility.

Telefonica’s improved growth is guaranteed since GVT owns a large new generation network with over 10.4 million homes located in 21 Brazilian states and more than 2.5 million broadband customers. These consumers are mostly located outside the capital city of Sao Paulo.

There is no doubt that Telefonica wants to capitalize on the trend, the Brazilian telecom industry is booming according to experts and even when new players have entered the market. At present, Telefonica Brasil’s Vivo brand has largest market share of 28.7%.

This acquisition will also lead to an easing in the scrutiny that Telefonica has been facing from the Brazilian anti-trust watchdog, Cade. The scrutiny is a result of the stake Telefonica held in Telecom Italia, the second-largest telecom operator in the region. The stake will transfer to Vivendi after the acquisition is completed.

Telefonica earlier offered Vivendi the option to purchase 1.1 billion shares, which the company had in Telecom Italia. The shares represent 8.3% of Telecom Italia’s voting share capital. This was accepted 4.5% of the capital held by Vivendi.

Telefonica closed in the green yesterday, up 0.6%. Vivendi was up 0.3%, and Telecom Italia was down 0.6%. The final closing details of this transaction are subject to obtaining the relevant regulatory authorizations and will soon be announced publicly.

A.L. Mijares

About Telefonica

Telefonica, S.A. is a Spanish broadband and telecommunications provider with operations in Europe, Asia, North America and South America. It is the sixth-largest mobile network provider in the world. Telefonica started as a public telecommunications company. It is headquartered in the Distrito Telefonica in Madrid.

Telefonica is a telecommunications company that invests highly in up to date technologies. is a supporter of the Hybrid Broadcast Broadband TV (HbbTV) initiative (a consortium of broadcasting and Internet industry companies including SES, OpenTV, and Institut für Rundfunktechnik). This updated system in telecommunications and programming promotes an open European standard for hybrid set-top boxes for the reception of broadcast TV and broadband multimedia applications with a single user interface. This technology has run pilot HbbTV services in Spain. Telefonica stock market evolution:

http://www.marketwatch.com/investing/stock/tef

About Vivendi

Vivendi SA (formerly known as Vivendi Universal) is a French multinational mass media and telecommunication company. It has headquarters in Paris, France. The company is active in music, television and film, telecommunications as well as internet services.

The company primarily focused on digital entertainment and telecommunications. It is the owner of the French TV channel and movie producer Canal+ Group, as well as music world leader Universal Music Group, Vivendi is also active in telecommunications, owning mobile companies SFR (France) and GVT (Brazil). The most recent transaction of Vivendi was in November 2013, it signed the definitive agreement to sell its majority and controlling stake in Maroc Telecom (Morocco) to Etisalat based in Abu Dhabi. Vivendi stock market evolution:

http://www.marketwatch.com/investing/stock/viv

About Global Village Telecom

Global Village Telecom (GVT) is a Brazilian telecommunications company. It provides services on landline telephone, broadband for consumer and business sectors, Pay TV and voice over IP. GVT has been in the market since the end of 2000. It also offers high-speed broadband, pay TV with paid high-definition channels and integrated and convergent advanced landline telephony. The company offers broadband internet connection through ADSL, ADSL2 +, VDSL2 and FTTH technologies. It offers content and Internet services through the online portal POP, besides VoIP services through VONO to residential and micro-enterprise sectors in Brazil.

Vivendi has bought a 58% stake of the company by the end of 2009, and raised its participation to 99.17% the following year. On August 30, 2014, Vivendi announces the sale of GVT to Telefonica of Spain.