Vodafone eying up Brazilian acquisition

Vodafone is reportedly interested in acquiring one of Brazil’s three leading operators, with TIM mooted as the primary candidate.

The operator group is believed to have informed Brazilian authorities that it would prefer to acquire an existing Brazilian provider than bid in the country’s delayed 4G spectrum auctions.

However, the ownership situation of several Brazilian operators is complex. The market leader Vivo is fully owned by Telefonica – although the Spanish giant has been ordered to decrease its stake by Brazil’s antitrust watchdog Cade.

Telefonica also holds an indirect investment in TIM Brasil via its 8.3% stake in Telecom Italia. Cade has notified the group that if it wishes to retain control of Vivo, it must either end its involvement with TIM or to find a new partner for Vivo.

One candidate for this partnership is fixed-line operator GVT, which is a subsidiary of French group Vivendi. Telefonica has made a €6.7 billion ($9 billion) offer for the firm, but faces competition from Telecom Italia, which is currently considering a merger between its Brazilian unit TIM Participacoes and GVT.

Telefonica’s offer for GVT also allows Vivendi the choice of taking over Telefonica’s stake in Telecom Italia. If the proposed TI/GVT merger goes through, Telefonica would lose the option of offloading its TI stake to Vivendi and would no longer be able to consider GVT as a potential partner for Vivo.

Vodafone therefore would be entering into an uncertain market. The UK group has a partnership with Brazilian firm Datora that gives it a footprint in the country’s corporate and M2M markets, but acquiring a network would be a significant step.

The UK firm has been bolstering its presence in its existing mobile markets by acquiring fixed networks. Vodafone has little presence in South America, and recently CEO Vittorio Colao stated that the group only expands into new geographical regions if they serve its corporate base.

Colao noted that Vodafone would likely decline the opportunity to acquire any of the Mexican assets that America Movil is selling.


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