Bloomberg: Telecom Italia Mulls $9.4 Bln Rival Bid For Vivendi's GVT

(RTTNews) - Italian phone carrier Telecom Italia SpA (TI, TIAOF) is said to be mulling a rival bid of as much as 7 billion euros or $9.4 billion, to enter the race to acquire Paris-based Vivendi S.A.'s (VIV.L, VIVEF) Brazilian Internet provider GVT S.A., according to a Bloomberg report on Sunday. Telecom Italia is looking to outbid Spanish telecom operator Telefonica S.A.

Madrid-based Telefonica launched a bid for GVT on August 5 in a proposal that will combine Telefónica Brasil S.A. (VIV) with GVT in a cash and stock deal valued at 6.7 billion euros or $9 billion at current exchange rates. A combination of Telefonica's Vivo and GVT is billed to create the largest telecom operator in Brazil's phone market.

The reports indicated that talks have taken place between Telecom Italia CEO Marco Patuano and Vivendi Chairman Vincent Bollore. The talks were already under way even before the offer made by Telefonica as the bid was made after it came to know about talks between Telecom Italia and Vivendi.

Through Telefonica's offer, Vivendi would also have the opportunity to acquire 8.1 percent of Telecom Italia as Telefonica is Telecom Italia's biggest single investor.

Internet-access provider GVT is a successful and fast growing alternative operator in Brazil. The two telecom giants are vying for GVT in a bid to add broadband offering in Latin America's largest market as phone-service revenue drops in Spain and Italy amid intense competition.

The two companies are already one of the biggest rivals in the Brazilian phone market, with Telecom Italia's Brazilian unit Tim Participacoes SA (TSU) competing currently with Telefonica's commercial brand in Brazil, Vivo. Telecom Italia would be looking to combine Tim Participacoes with GVT if the bid is successful.

Telecom Italia confirmed on Thursday it was conducting a detailed review on the possibility of floating a bid for GVT that would result in an "industrial combination" between GVT and Tim Participacoes.

However, Telecom Italia is currently waiting for the approvals by the boards of both Telecom Italia and its Brazilian unit to go ahead with a bid to snare the deal from Telefonica. The all-stock offer is reportedly expected to be made by the end of the month or early next month.

As consideration for GVT, Milan-based Telecom Italia is said to be offering Vivendi a 20 percent stake in Telecom Italia and a stake in the combined Brazilian entity. The 20 percent stake in Telecom Italia is currently valued at about 3 billion euros, based on its market value of about 15 billion euros. Tim Participacoes has a market value of about $11.7 billion.

GVT is reportedly working with financial advisers Goldman Sachs Group Inc. and Credit Suisse Group AG on its potential sale.