Brazil’s antitrust authority Cade has given preliminary approval to Telefonica’s planned acquisition of local broadband provider GVT, provided that both parties sign a merger control agreement to ensure competition in the markets where they…
Brazil’s antitrust authority Cade has given preliminary approval to Telefonica’s planned acquisition of local broadband provider GVT, provided that both parties sign a merger control agreement to ensure competition in the markets where they operate.
In a statement, Cade said that the companies had agreed to “adopt measures to effectively ensure the supply, quality and competitive prices on fixed telephony markets, broadband internet and pay-TV”.
The regulator warned that, although the GVT deal could potentially improve services for consumers, it would also result in market concentration in parts of the Sao Paulo state. However, a technical analysis concluded that price increases were unlikely, Cade said.
Telefonica agreed the US$9.3bn cash-and-stock deal to buy GVT from French conglomerate Vivendi in September last year. As part of the agreement, Vivendi will receive a 7.4% stake in Telefonica’s Brazilian mobile player Vivo, and the Spanish incumbent’s 5.7% stake in Telecom Italia (TI).
The companies have committed to adopt remedies to eliminate competition concerns in the mobile telephony segment given that, as a result of the takeover, Spain’s Telefonica would hold a direct stake in TI, the parent of Brazil’s second-largest carrier, TIM Brasil, while Vivendi would have stakes in both Vivo and TI.
Telefonica is reported to be waiting for the GVT deal to close before submitting a joint bid with smaller rivals Oi and America Movil’s Claro to acquire and break up TIM Brasil.
