Telefónica unseats Telecom Italia in the battle for GVT

<p>Telefonica results miss expectations.</p>

The credit rating agency Moody’s said yesterday that Telefónica’s offer will not affect the rating of the Spanish operator. It is also important to highlight that this operation forces to Portugal Telecom and Carlos Slim to make a move within the sector in Brazil.

Moreover, UBS analysts estimate “Telefónica can extract cash-cost synergies on the 3-5% range of GVT cash-cost base, mainly from backhauling and fibre roll-out. Over the medium term there is a significant potential for revenues synergies too, stemming from the cross-selling of GVT fibre to the postpaid mobile subs of Telefónica Brazil (42% mobile postpaid subs market share). Telefonica will not incur into additional leverage as the deal will be funded with a rights issue (~8% of market cap).”

 

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