- Telefonica (TEF -3.1%) and Brazilian subsidiary Vivo (VIV -7.5%) are off sharply following news Telefonica has bid $9B to acquire Brazilian wireline carrier GVT from Vivendi (OTCPK:VIVHY +1.9%), with plans to merge it with Vivo's mobile and wireline ops.
- America Movil (AMX -2.5%), which had 68.8M Brazilian mobile subs and 34.5M wireline revenue-generating units at the end of Q2, is also off. As are Telecom Italia (TI -6%) and Brazilian unit TIM Participacoes (TSU -9.7%), and Oi (OIBR -6.7%) and merger partner Portugal Telecom (PT-OLD -5.1%).
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Vivendi says it will study Telefonica's bid, but insists for now that "none of its subsidiaries are for sale." The conglomerate agreed to sell French carrier SFR in April.
- A Vivo/GVT pairing could be a tougher rival for America Movil and Oi/PT, and would likely lead to a sale of Telefonica's stake in TI (as sought by Brazilian regulators). As it is, Telefonica has announced plans to cut its TI stake (currently at 14.8%) through a convertible debt offering.
- There's speculation Vivendi could take Telefonica's remaining TI stake as part of its payment for GVT, but Nomura has its doubts. "It's hard to see why, from a Vivendi shareholder's perspective, they would want to have a minority position in Telecom Italia."