Who will purchase GVT?
by Eduardo Tude
Vivendi, controller of GVT, is going through crisis due to the problems presented by its mobile operator in France (SFR), result of the beginning of the operations provided by a new competitor (Free).
In face of the crisis, which led to the fall in value of Vivendi's stocks, the company started to analyze selling some of its assets inside Telecom area. In order to do so, Vivendi hired investment banks to help selling participations at Maroc Telecom and at GVT.
The value estimated by analysts for the sale of Maroc Telecom is € 4 billion and GVT reaches € 8 billion.
Vivendi's net debt hit € 14.1 billion in 2Q12. GVT is an attractive asset for any operator working in Brazil. It has a modern network and offers high speed broadband in 136 Brazilian cities. It's about a profitable operation holding EBITDA margin superior to 40% (more details).
The main players interested in acquiring GVT, among the Groups that operate inside the Brazilian market would be:
Nextel wasn't included in this list because it's focused on the launch of the 3G operation in Brazil.
The value estimates for this operation (€ 8 billion) will, however, discouraging some candidates who have big debts.
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Telefônica Group is going through a moment of selling assets to reduce the net debt of € 58.3 billion and face the European economic crisis and particularly in Spain. Telefônica is selling its call centers operations (Atento) for € 1 billion and is opening O2's capital, Telefonica's operations in Europe.
Telecom Itália went through a similar process years ago, which led to the sale of great part of its assets in Latin America and in Europe.
The acquisition of GVT for € 8 billion would increase net debt/EBITDA to a value above 3, if these Groups (except América Móvil) acquire GVT. Overtake this limit isn't recommended, because it could result in a decrease of credit of these Groups that would pay higher interest rates for their loan.
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It seems clear that, excluding América Móvil, the estimated price of € 8 billion would be too expansive for the potential candidates that already operate in Brazil to acquire GVT.
The estimate price of GVT can also be considered too high by América Móvil which usually purchases assets with lower prices. The group is, at the moment, committed to expand its operations in Europe by the acquisition of participation at KPN and in an Austrian operator.
The following options are left for Vivendi:
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