Brazil may jointly analyze Telefonica's GVT deal, Telecom Italia exit

BRASILIA, Sept 3 Wed Sep 3, 2014 11:13am EDT

BRASILIA, Sept 3 (Reuters) - Brazil's antitrust watchdog Cade could analyze Telefonica SA's plan to purchase smaller rival GVT SA jointly with a proposal to exit Telecom Italia SpA, depending on how the deals are presented to regulators, the agency's president said on Wednesday.

Telefonica this week signaled that it will pull out from Telecom Italia once it completes the acquisition of GVT. Brasilia-based Cade ordered Telefonica in December to exit Telecom Italia, which controls Brazil's No. 2 wireless carrier, to ease competition concerns in Brazil.

Regulators are ready to analyze the Telefonica-GVT deal once it is filed, Cade president Vinícius Carvalho said. Different arrangements for the deal, including a potential swap of Telecom Italia shares between Telefonica and France's Vivendi SA , which owns GVT, could be analyzed by regulators.

"If in the middle of the transaction, there is the Telecom Italia stake that could be traded between Telefonica and Vivendi, it will be analyzed as part of the entire deal," Carvalho said.

For years, the ties between Telefonica, which controls Brazil's No. 1 mobile carrier, and Telecom Italia sparked regulatory unease in Brazil. Telefonica has taken steps to cut its Telecom Italia stake since Cade's December ruling as a way to preserve its leadership in Brazil - Telefonica's second-largest market behind Spain in terms of cash generation.

The Madrid-based company offered Vivendi an 8.3 percent voting stake in the Italian company as part of $9.8 billion bid for GVT. The companies will discuss the deal for the next three months.

Telefonica controls wireless carrier Vivo, which directly competes against Telecom Italia's local unit TIM Participações SA. Cade gave Telefonica 18 months to either sell its interest in Telecom Italia or seek a new partner for Vivo.

Vivendi shares fell 1 percent in Paris to 19.71 euros, while telecom Italia shed 0.2 percent to 0.8605 euros on Wednesday. Telefonica climbed 1.2 percent to 12.160 euros. (Additional reporting and writing by Guillermo Parra-Bernal; Editing by Nick Zieminski)