A report from Bernstein Research suggests that Spanish telco Telefonica, French media and telecoms group Vivendi and locally based Tele Norte Leste Participacoes should integrate their Brazilian operations with local players.
The report, which was issued…
A report from Bernstein Research suggests that Spanish telco Telefonica, French media and telecoms group Vivendi and locally based Tele Norte Leste Participacoes should integrate their Brazilian operations with local players.
The report, which was issued on March 9, states that the three operators should seek to integrate their Brazilian fixed line units with a local mobile operator, adding that it expects at least one, but possibly two, M&A deals in the Brazilian mobile market over the coming 12-18 months.
Bernstein Research describes the current state of the Brazilian telecoms market as a seller’s market with increasing competition for foreign operators from local telcos, and states that all three aforementioned telcos should integrate themselves with a mobile player. Currently Telefonica and Portugal Telecom co own Vivo while Telecom Italia controls TIM.
Last year Vivendi saw off competition from Telefonica to acquire Brazilian fixed line and broadband provider GVT. Both operators could benefit from offering combined fixed and mobile services however, despite Vivendi claiming that GVT was not dependent on mobile for future success.
Separately, the largest individual shareholder in Portugal Telecom, Nuno Vasconcellos, has reportedly said that the Brazilian market is indispensable for the telco’s future growth.
Vasconcellos has been quoted stating that the Portuguese incumbent should focus its attention on the acquisition of Telefonica’s stake in Vivo, the Brazilian operator which is jointly held by PT and Telefonica. Vasconcellos holds a 6.74% stake in PT, with Telefonica owning 10%, Brandes Investment Partners 9.48%, Espirito Santo 8.63% and Caixa Geral a 7.28% stake.
The individual shareholder concluded that a sale of PT’s stake in Vivo would be throwing away the future of the telco, as the Brazilian market is a significant part of it. Furthermore, Vasconcellos stated that the Brazilian telecoms market has altered following Vivendi’s entrance via its acquisition of GVT in late 2009, and that now is the time for Telefonica to act fast, or the market will consolidate in a new direction.
