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Telcos jostle for position

Tuesday, August 05, 2014 - 01:42

Europe's telecoms sector is scrambling for consolidation. Spain's Telefonica has offered 6.7 billion euros to France's Vivendi for its Brazilian internet provider GVT as it tries to increase its presence in Latin America. But Deutsche Telekom is unimpressed by French group Iliad's bid for its U.S. mobile unit. Joanna Partridge reports.

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Another flurry of attempted deal-making in Europe's telecom sector. Spain's Telefonica is looking to increase its presence in Brazil's fast-growing market. It's presented a 6.7 billion euro cash and share offer to France's Vivendi for its Brazilian internet provider GVT. Telefonica already controls Brazil's leading mobile operator Vivo and the Latin American country is its second-biggest cash generator. Vivendi's said none of its subsidiaries are for sale, but will consider the offer at its next meeting. Meanwhile Deutsche Telekom reportedly isn't convinced by French telecom group Iliad's surprise bid for its U.S. mobile unit. That's even though Iliad's offer for 57% of T-Mobile US has lower regulatory hurdles than a rival offer by U.S. mobile carrier Sprint. Chris Beauchamp from IG says Deutsche Telekom believes the unit is worth more. SOUNDBITE: Chris Beauchamp, Market analyst, IG, saying (English): "They have to find some way of co-operating to find a price that's mutually acceptable, but ultimately I think Deutsche Telekom will choose to give in in due course, but it's aiming to extract a slightly higher price." Iliad has been seen as a catalyst for consolidation among mobile players in its home market of France. Like others it's now looking abroad. SOUNDBITE: Chris Beauchamp, Market analyst, IG, saying (English): "Companies have been operating in an area of limited growth and the question is now where is that growth going to come from? If the market is not seeing that kind of expansion then they naturally look to start acquiring businesses that they think fit more appropriately with their current outlook. So that's why you've got these movements coming through, companies looking to use the cash that they have on hand at least to try put it to some kind of productive use." With European telecoms markets like Germany and Britain already saturated and firms looking abroad - this deal-making may not be cut off soon.

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Telcos jostle for position

Tuesday, August 05, 2014 - 01:42