Telefónica looks for Brazilian telcos

Tuesday, 17 November 2009

After Telefónica’s failure to buy out Brazilian telco GTV, the Spanish telco is searching for alternatives in the country. Brazil remains for Telefónica a strategic market, especially in the internet business.

Last Friday, French media group Vivendi surprisingly bought out 37.9% of GTV with the option of buying another 19.6% so it can have total control of the broadband telco. Telefónica sources said the Spanish telco will not put in a counteroffer to Vivendi’s.

Telefónica has been looking to expand its business in Brazil where the telco already offers mobile telephony services, traditional telephony and internet to 62.5 million clients. The Spanish company arrived in Brazil in 1998 and nowadays has a privileged position in the mobile business thanks to its 50% stake (sharing with Portugal Telecom) in the Brazilian mobile telco leader Vivo. Telefónica's president César Alierta has not ruled out buying PT's shares in Vivo in order to reinforce its position in the Brazilian company which gives service to more than 50 million people.

Had Telefónica bought GVT the Spaniard telco would have been able to offer traditional and mobile telephony and DSL services in nearly the whole of the country. Local telco Telesp only sells internet in the Saô Paulo area where it has some 11.5 million clients and the company Vivendi soon could control is present in 82 regions more in Brazil. Telefónica must now seek alternatives to compete with OI, Brazil's telecommunication leader in the traditional telephony business.