Why is Vivendi purchasing GVT?


Vivendi, French group which operates in the Telecom and entertainment areas, announced in September its entrance in the Brazilian market through the acquisition of GVT. This is a sign of the importance of this market, which starts count on another important international player.


Vivendi has the size of other international groups that operate in Brazil, its revenue and net debt are similar to América Móvil/Telmex's - Group owned by the Mexican Carlos Slim.




Vivendi group is formed by 5 companies:

  • SFR, second mobile and fixed carrier in France, closed 2008 counting 19.7 million mobile subscribers (33.8% of market share) and 3.9 million fixed broadband accesses (21.9% of market share). SFR is a Vivendi's joint venture (56%) with Vodafone (44%) and acquired in 2008 the broadband operator Neuf Cegetel.
  • Maroc Telecom, leader operator in mobile and fixed Telecom in Morocco holding 14.5 million mobile subscribers (96% prepaid).
  • Canal+, company leader in Pay TV channels in France.
  • Universal Music Group, music number one in the world.
  • Activision Blizzard, video games number one in the world.

Telecom area (SFR and Maroc Telecom) represented 56% of Vivendi's revenue in 2008.


The acquisition of GVT, in which 2 billion Euros may be spent, represents a Vivendi's effort in order to increase its internationalization, starting to operate in the Brazilian market. In 2008, France accounted for 63% of the group's revenue.


GVT is likely to serve as basis for a Vivendi's wider hole in Brazil, it may involve the acquisition of 3G national license which Anatel will offer next year in an auction.


GVT is an important asset for Vivendi due to its broadband infrastructure which can be used as highlight to the launch of new services. The company has a modern network (NGN), which permits the offer of new generation services (SNG) with a complete integration of voice and data in the same infrastructure. Its local network is based in FTTH/B architecture allowing the offer of speeds until 100 Mbit/s. The company also has a long distance backbone of 15 thousand km (GVT acquired Geodex in 2007) and an advanced IT platform (OSS).


In Jun/09, GVT had about 1.2 million fixed accesses in service and 541 thousand broadband accesses. The company is present in 83 Brazilian cities and 14 states, including Salvador (in the state of Bahia). Keeping the focus in the most attractive markets, its next target is the market in the state of Pernambuco, announcing investments of R$ 60 million to start operating in Recife and Jaboatão dos Guararapes.


GVT's strategy is to operate in the most attractive markets with a modern network, what increases company's competitiveness in the conquest of new clients.


GVT's net revenue in the 1st semester of 2009 was 27.7% higher than what was registered in the 1st semester of 2008. The biggest growth was in data communication revenue (45.6%) which already represents 29% of the operator's revenue.





To that we can add GVT's good profitability. Its EBITDA margin in the 1st semester of 2009 (38%) is only lower than Telefonica's (38.5%).


You could ask:

  • Did Telefonica and Telmex lose the opportunity of purchasing GVT?
  • Is Vivendi doing a good business by purchasing GVT?
  • Will GVT participate of the 3G national license auction next year?
  • Will GVT also operate Pay TV?



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