Boston, MA 08/20/2014 (wallstreetpr) –The telecom industry is awash with deals from the U.S. to Mexico to Brazil, and all that is happening is mostly consolidations and Telefonica S.A. (ADR) (NYSE:TEF) is also in it. The company is looking to bolster its position in pay-TV, and it is ready to put its money to work for it in that area.
The company is dangling a carrot in the form of 7 billion euros or $9.4 billion for a Brazilian broadband telecoms entity known as GVT, which is currently owned by Vivendi. The company openly showed interest in GVT early this year of which it offered 6.7 billion euros, which involved cash and stock. However, it has moved further to say that it is also ready for a content sharing deal, which somehow makes the deal sweet.
Rival bid
However, Telefonica S.A. (ADR) (NYSE:TEF) faces a challenge of a potential rival deal. A bidding contest for GVT would not only make the acquisition process expensive, but one can even lose out totally. Telecom Italia is another firm with a serious interest to acquire GVT, and it has reportedly readying 7 billion euros for the business, it hopes to outbid Telefonica.
Pressure from investors to make strategic moves so as to ensure sustainable revenue growth is one of the many reasons why telecoms firms such as Telefonica S.A. (ADR) (NYSE:TEF) and going out to buy promising businesses to add to their portfolio. Competition is another thing that is not making big companies comfortable, which means they have to looks into new ways to grow revenue even as they bring their costs under control.
Paying the price
According to people with insider knowledge, Telefonica S.A. (ADR)(NYSE:TEF) would not let go an opportunity to add GVT to its portfolio even if it means improving its offer. The acquisition of GVT is expected to help the company boost is fixed business in Brazil and also accelerate the consolidation of the Brazilian market.
Shares of Telefonica S.A. (ADR) (NYSE:TEF) declined 0.06% to close at $5.72 on Tuesday.
