The deal, signed yesterday, will see Vivendi receive €4.66 billion in cash, from which a bank debt of around €450 million and adjustments in working capital will be deducted. Vivendi will also receive 7.4% of Telefonica Brasil shares, with a current stock market value of €2.02 billion, and 5.7% of Telecom Italia shares at a current stock market value of €1.01 billion. The agreement means that Vivendi will hold 8.3% of Telecom Italia’s voting shares. It will also receive 12% of the share capital of Telefónica Brasil post the latter’s acquisition of GVT.
Vivendi will also be liable for tax estimated at about €500 million.
The deal is subject to approval by Brazilian telecom regulator Anatel and competition regulator Cade. Vivendi expects to the deal to close in the first half of next year.
Regulatory approval could be complicated by a demand by Cade that Telefónica sell its interest in Telecom Italia before the GVT acquisition is approved. Telecom Italia owns a majority stake in TIM Brasil and the regulator has indicated in the past that it will not review Telefónica’s acquisition of GVT until the issue has been resolved.
GVT owns a network with over 10.4 million homes passed in 21 Brazilian states and more than 2.5 million broadband customers, most of them located outside of São Paulo.