DirecTV is considering a bid for Vivendi’s Brazilian broadband specialist GVT, a source told Reuters, adding to a list of companies eyeing the unit.
DirecTV is Brazil’s second-largest pay TV provider with nearly 30% of the market through its Sky Brasil brand.
The sale process is at an early stage and could fetch up to 8.5 billion euros.
The French media/telecom conglomerate is reviewing its portfolio of businesses and strategy in a bid to cut debt and revive its lagging shares, and earlier shopped around its video games unit Activision, said Reuters.
DirecTV is on the list of interested parties that will have access to GVT’s financial data. A deadline for a first round of bids hasn’t been set, reported Bloomberg.
Espirito Santo analysts said DirecTV would be interested in GVT as both compete in the fast growing pay-TV sector, with GVT the price-cutting newcomer: “DirecTV would be interested in knocking out a potentially troublesome operator before it gains too much traction, gaining access to synergies, a decent fixed-line network, and also the broadband market in the process,” they said in a research note.
Telefonica and Telecom Italia, both in Brazil already, are also among the possible bidders but are in the midst of debt reduction programs that could put GVT’s high price out of reach. Carlos Slim’s America Movil, which owns Brazil’s biggest pay TV operator and second-largest broadband provider, may also place a bid.
Sergio Rodriguez, a credit analyst from Fitch Ratings, said GVT was not a “must do” deal for America Movil given its strong position in Brazil but that the group could afford GVT if it decided it wanted to bid.
Vivendi bought GVT in 2009 for 2.9 billion euros after a bidding war with Telefonica, as part of a drive to boost its emerging market exposure. While GVT has become a driver of sales and growth, the unit also consumes considerable cash.