Telefonica is set to exit Telecom Italia after it has finalised the acquisition of Vivendi’s Brazilian broadband operator GVT, with a view to circumventing competition concerns in Brazil. "After the GVT operation the message is clear, we don't want to stay in Telecom Italia," commented Telefonica chairman Cesar Alierta at the XXVIII telecommunications and digital economy meeting held at Universidad Internacional Menendez Pelayo (UIMP) in Santander. Telefonica has been the dominant partner in the Telco SpA investor group that has controlled Telecom Italia for the past 7 years but the imminent break up of the holding has prompted questions about Telefonica’s plans for the rest of its stake in Telecom Italia. It will still hold 8.3 percent of voting rights in the Italian operator once it completes a transaction announced in July to convert EUR 750 million of bonds exchangeable into Telecom Italia shares.
On 28 August Vivendi accepted Telefonica’s proposal to enter exclusive negotiations over the sale of GVT for EUR 7.45 billion, snubbing a cash and shares offer from Telecom Italia that valued GVT at EUR 7 billion. Telefonica offered its Telecom Italia shares to Vivendi as part of its bid for GVT and last week confirmed that it expects the purchase to close in mid-2015. It also said it would issue EUR 3.4 billion in new shares to help to finance the cash portion of the GVT deal, but in Santander Alierta said the company could also use shares held as treasury stock if market conditions complicate a capital increase. "We're not worried about financing the GVT deal. Obviously, we can use our treasury stock for certain things," he said.
