Brazilian telco GVT and satellite operator EchoStar have ended discussions over forming a pay-TV joint venture in Brazil.
In a brief statement GVT’s owner, French media group Vivendi, stated that discussions between the two have ended but that it…
Brazilian telco GVT and satellite operator EchoStar have ended discussions over forming a pay-TV joint venture in Brazil.
In a brief statement GVT’s owner, French media group Vivendi, stated that discussions between the two have ended but that it remained “firmly committed to accelerating the deployment of GVT’s pay-TV business”.
Vivendi said that GVT would now pursue a project on its own. Talks between GVT and EchoStar were entered into at the start of October. The companies said they were seeking to take advantage of the fast growing Brazilian pay-TV market.
Demand in the country is expected to increase rapidly with Brazil to host two major sporting events in the next couple of years, the FIFA World Cup in 2014 and the Olympic Games in 2016.
The JV was to be headquartered in Brazil, managed by GVT and would have utilised EchoStar’s satellite and Brazilian licences.
The future of GVT is uncertain. Vivendi had previously conducted an auction process for the fixed-line telephone, broadband and pay-TV operator. However the French group suspended the sale process in March as it could not get the price it wanted for GVT, reported to be €7bn (US$9.6bn). Vivendi is now set to spin-off its French mobile operator SFR from the rest of its business – which will become media-focused – and is selling its majority stake in Maroc Telecom to Etisalat.
This will leave GVT as the conglomerate’s only telecoms asset. Speaking on Vivendi’s Q3 conference call outgoing CFO Philippe Capron said that GVT’s future would rest in the hands of the yet-to-be-appointed management team for the new, demerged media group Mediaco.
Analysts from Bernstein Research still see GVT as an acquisition target and have suggested a merger between the fixed-line player and Telecom Italia’s local subsidiary TIM Brasil. In a report earlier this month Bernstein suggested the possibility of this happening was the main motivator for Telefonica’s takeover of TI’s controlling shareholder group Telco. That stake increase could now lead to a break-up of TIM, meaning Telefonica’s Brazilian subsidiary Vivo would have one less competitor.
In a note published earlier in the autumn Bernstein said: “Up until now [TIM Brasil has] been a little bit disruptive but the reality is that with the Vivendi owning GVT and GVT potentially for sale with TIM Brasil to be combined with GVT, it really would be a kind of super telco in Brazil.
“GVT has fibre everywhere but Sao Paulo, TIM Brasil has fibre in Sao Paulo and wireless everywhere.”
