All eyes on Brazilian cell phone market
MADRID — Cash rich from its sale of “Big Brother” producer Endemol, Spanish telco Telefonica has bid north of E3 billion ($4.1 billion) to buy out its 50-50 partner in Brazilian cell-phone operator Vivo.
Portugal Telecom is unlikely to give up its stake in Vivo easily, but the move by Telefonica, which recently paid $3.1 million for 10% of Telecom Italia, is re-garded as a defensive step designed to shore up its share in a key territory.
Bid, disclosed to the Financial Times by Telefonica chairman Cesar Alierta, is fueled by a war chest replenished by Telefonica’s mid-May sale of a 75% stake in Dutch TV giant Endemol for $3.6 billion.
A Telefonica-controlled Vivo would allow the Spanish telco to streamline operations between Vivo and its Internet service provider Terra. Such a move could have an impact upon Vivo content suppliers, which include Fox; local broadcaster Bandeirantes, which supplies a news service, Discovery; Warner Bros.; and Nickelodeon.
Two years ago, Vivo dominated Brazil’s cell-phone market with a 35% share, compared with 26% for Telecom Italia’s TIM Brazil and 22% for Claro, owned by Mexican magnate Carlos Slim’s America Movil. More recently, Vivo’s lead has been trimmed; its share is now 28% vs. 26% for TIM and 24% for Claro.
Alierta claims Vivo would work more efficiently without tensions between Telefonica and Portugal Telecom, sparked by Telefonica’s support for a recent failed takeover of the Portuguese telco by Sonae.