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DirecTV joins possible bidders for Vivendi's GVT
NEW YORK/PARIS |
NEW YORK/PARIS (Reuters) - U.S. group DirecTV is considering a bid for Vivendi's, Brazilian broadband specialist GVT, a source familiar with the matter said on Wednesday, adding to a list of companies eyeing the unit as a way to expand in a fast-growing emerging market.
DirecTV is Brazil's second-largest pay TV provider with nearly 30 percent of the market through its Sky Brasil brand.
The sale process is at an early stage and Vivendi does not want to rush into divesting what it sees as a prized asset with strong growth potential that could fetch up to 8.5 billion euros.
The French media-to-telecom conglomerate is reviewing its portfolio of businesses and strategy in a bid to cut debt and revive its lagging shares, and earlier shopped around its video games unit Activision.
Bloomberg reported on Tuesday that California-based DirecTV was on the list of interested parties that will have access to GVT's financial data, and that a deadline for a first round of bids hasn't been set.
A source familiar with the process confirmed that DirecTV was among the potential bidders.
Espirito Santo analysts said DirecTV would be interested in GVT as both compete in the fast growing pay-TV sector, with GVT the price-cutting newcomer.
"DirecTV would be interested in knocking out a potentially troublesome operator before it gains too much traction, gaining access to synergies, a decent fixed-line network, and also the broadband market in the process," they said in a research note.
OUT OF REACH
Telefonica and Telecom Italia, both in Brazil already, are also among the possible bidders but are in the midst of debt reduction programs that could put GVT's high price out of reach, people familiar with the process said.
Asked about GVT, Telecom Italia's chief executive Marco Patuano said earlier in September that no "dossier was on the table for the moment.
Carlos Slim's America Movil, which owns Brazil's biggest pay TV operator and second-largest broadband provider, could also review GVT's financials to evaluate a bid.
Sergio Rodriguez, a credit analyst from Fitch Ratings, said GVT was not a "must do" deal for America Movil given its strong position in Brazil but that the group could afford GVT if it decided it wanted to bid.
"Carlos Slim has (an) approach of buying companies at reasonable valuations so it will depend on how much Vivendi wants," he added.
Vivendi bought GVT in 2009 for 2.9 billion euros after a bidding war with Telefonica, as part of a drive to boost its emerging market exposure. While GVT has become a driver of sales and growth, the unit also consumes considerable cash.
In the coming years, GVT will also have to make a strategic choice whether to invest additional billions to launch a mobile service to keep up with local rivals who can market both fixed and mobile offers to consumers.
As a result, Vivendi's thinking has evolved from seeing the Brazilian broadband provider as a must-keep asset to one that it would consider selling at the right price.
Vivendi shares were up 1.6 percent by 6:00 a.m. EDT (1000 GMT), while France's blue chip index was down 0.2 percent.
(Reporting by Jonathan Gould, Leila Abboud and Emily Flitter; Editing by Eric Walsh and Mark Potter)
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