Telecom Italia (TI) is putting together a €7 billion bid for GVT, Vivendi’s broadband unit in Brazil, in an attempt to outflank Telefonica.

According to Bloomberg sources, Vivendi would get a 20 per cent stake in the Italian incumbent, plus a stake in the entity that would combine TIM Participacoes – TI’s Brazilian operation – with GVT.

TI is reportedly keen on the move to shore up falling voice revenue. It’s believed the Italian company would also help distribute Vivendi’s media content in Brazil and Italy.

If the merger were to take place, it would be a blow to Telefonica. The Spain-headquartered firm previously made a €6.7 billion offer to acquire GVT.

Telefonica’s bid is partly motivated by a desire to placate Cade, the country’s antitrust watchdog. Cade wants Telefonica to loosen its grip on the country’s mobile market after raising its stake in TI last year.

As well as indirect investment in Brazil’s mobile market, through Telecom Italia’s TIM Participacoes, Telefonica fully owns Vivo, the country’s biggest mobile operator.

Telefonica’s proposed GVT deal, however, would see a watering down of its TI stake. Vivendi would get an 8.3 per cent slice in the Italian incumbent, courtesy of Telefonica giving up shares.