|
 Vivendi, which will examine the bids at a Thursday board meeting,
must now choose whether to exit its last remaining telecom business
after selling off its French and Moroccan mobile operations to focus
more on media.
French tycoon Vincent Bollore, who is Vivendi's chairman and largest
shareholder, has led the talks with Telefonica and Telecom Italia in
recent weeks and his view will weigh heavily in the outcome.
Spain's Telefonica said it had raised a previous 6.7 billion euro
bid for GVT to 7.45 billion euros ($9.84 billion), increasing the
cash component of the initial offer made at the start of August.
Telefonica, which is indirectly the biggest shareholder in Telecom
Italia, would also pay Vivendi with a 12 percent stake in the
combined Brazilian entity of which about one third could be
exchanged for a 5.7 percent stake in Telecom Italia if Vivendi so
chose.
Telefonica said its offer expires on Friday unless it gets exclusive
negotiations, in which case it would last for three months.
Telecom Italia said it made a cash-and-share bid that values GVT at
7 billion euros, including 1.7 billion euros in cash, a 16 percent
stake in Telecom Italia and a 15 percent stake in the new Brazilian
entity.
It needs GVT to shore up its Brazilian mobile operator Tim
Participações that has no fixed network, and also to ward off a
potential bid from local rival Grupo Oi, which wants to split up Tim
between itself, Mexico's America Movil and Telefonica.
A slowdown in Brazil's mobile phone market is forcing the major
players in the region to chase higher-value customers through the
sort of pay-TV and broadband services that GVT has pioneered in
Brazil, a large cash-generating market for both Telefonica and
Telecom Italia.
Oi's move also aims to cut the number of mobile operators to three
from four, which could blunt competition.
QUICK DECISION SEEN
Vivendi, which owns Universal Music Group and French pay-TV operator
Canal Plus, is expected to weigh not just the price and cash on
offer from the bidders, but also the strength of the future
Brazilian company in which it would own a minority stake.
It must also decide if it wants a stake in Telecom Italia, a heavily
indebted former monopoly that earns high profit margins in its home
market but needs massive network investment to return to growth.
A person familiar with Vivendi's thinking said late on Wednesday
that the French company could make a decision quickly.
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"The board may decide to take some time to examine the offers or it
could decide to negotiate as a priority with one side," said the
person.
Vivendi shares were down 1 percent at 0857 GMT, compared to a 0.4
percent decline in the French CAC-40 index.
The idea that Vivendi would consider taking a stake in Telecom
Italia after spending so long trying to focus on media has left some
investors questioning Bollore's motivation.
"On paper, it's clear-cut that the Telefonica bid looks more
attractive since it has a higher value and raised the cash
component," said Kepler Securities analyst Conor O'Shea.
"But the Bollore factor is a wildcard - he has business interests in
Italy, so some wonder if there is a reason he and Vivendi want to
own a large stake in Telecom Italia?"
O'Shea has a "hold" rating on Vivendi.
Bollore owns 7 percent of Italian bank Mediobanca, the investment
bank that has long been at the heart of Italy's high finance, and he
used to sit on the board of insurer Generali.
Both Telecom Italia and Telefonica's bids would merge GVT, which
serves high-end broadband and pay-TV customers in Brazil, into their
respective local mobile businesses.
Telefonica owns Brazil's largest mobile operator Vivo, while Telecom
Italia owns number two Tim.
Getting hold of GVT is crucial for both companies since their
European home markets have been shrinking for the past few years
amid fierce price competition. Brazil brings in one fifth of
Telefonica's revenue and one third of Telecom Italia's sales.
(1 US dollar = 0.7573 euro)
(Reporting by Tracy Rucinski in Madrid and Gwenaelle Barzic in
Paris; editing by Tom Pfeiffer)
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