Madrid: Spain’s Telefonica has made a €6.7 billion (Dh32.9 billion) bid to France’s Vivendi for its Brazilian broadband unit GVT as it seeks to strengthen its mobile leadership in the fast-growing Latin American country.

The surprise move comes after Vivendi, led by its chairman and largest shareholder Vincent Bollore, said in late June it wanted to keep its last remaining telecom asset despite repositioning itself as a media company.

In a statement, the French company said that none of its units were for sale but it would consider Telefonica’s offer at its next board meeting.

Telefonica said on Tuesday its offer consisted of an 11.96 billion Brazilian reals (Dh19.3 billion) payment in cash plus new shares to be issued in Telefonica Brazil worth 12 per cent of the larger group.

In an effort to cut the cost of the deal, Telefonica offered Vivendi the chance to acquire an 8.3 per cent stake in Telecom Italia.

Brazil, where Telefonica controls the leading mobile operator Vivo, is a crucial market for the Spanish telecoms giant since it is its second largest cash generator and has growth potential unlike relatively saturated markets such as Germany and Britain.

A purchase of GVT would help the Spanish operator bulk up in fixed telephony and broadband where it is in third place in Brazil with an 18.4 per cent share. GVT is Brazil’s leading company in high-speed internet and connected television.

Telefonica has long coveted the asset — it lost an initial bidding war to buy GVT to Vivendi in 2009.

Telefonica shares had slipped 1.33 per cent to €11.82 mid-morning while Vivendi’s rose 0.63 per cent to €19.54 .

Other bidders?

Some analysts saw Telefonica’s bid as positive particularly if Vivendi finished up buying its Telecom Italia stake as part of the bargain. Telefonica has been reducing its Telecom Italia holding to resolve the antitrust issue raised by being its largest shareholder and owning local mobile operator Vivo.

“This [bid] would allow Telefonica to acquire GVT, the most successful alternative and fast-growing operator in the country and to avoid all the regulatory complications it would have to face in the next few months,” said broker Renta4 in a note to clients.

But Telefonica’s move could also prompt interest from other buyers. When Vivendi tried to sell GVT in 2012, it attracted a bid from a private equity consortium led by KKR and US satellite television provider DirecTV, which is in the process now of being bought by US telco AT&T. Vivendi decided not to sell at that time because the bids were too low.

A source familiar with the French company’s thinking said on Tuesday that the Telefonica bid was a “good price for a first bid” but that it remained unclear what Bollore wanted to do.

The person added that Telecom Italia could also jump into the fray but that it was probably too early for DirecTV since the AT&T deal was still under regulatory review.

“I think it will come down to a war between the Spanish and the Italians,” he said.

“But a decision to sell GVT has enormous implications for Vivendi,” said the person, adding that Vivendi did not really have an immediate use for the money.

In addition Bollore just took the reins of the group and has said his aim is to build a coherent media company by acquisitions and by making its pay-TV, music, and Brazilian telecom unit work more closely together.

Analysts however have speculated that Bollore would be open to shedding GVT at the right price.

“Vivendi’s language suggests it would be willing to sell but is waiting for any counter-bids: GVT is an attractive asset,” wrote Liberum analysts, adding that AT&T could be interested.

“We think Vivendi will sell — GVT does not fit in with its stated strategy of being a media and content player.”