Telefonica is planning to sell its remaining shares in Telecom Italia (TI) after completing the acquisition of Brazilian fixed operator GVT from Vivendi, according to Reuters.
The Spanish company offered Vivendi the rights to its remaining shares in TI, which represent an 8.3 per cent stake, as part of the GVT bid. If Vivendi takes up the option it would become the largest single backer of TI.
Telefonica chairman Cesar Alierta was quoted as saying that after losing out on GVT, “the message is clear, we don’t want to stay in Telecom Italia”.
Telefonica must comply with a Brazilian competition directive that it severs its ties with TIM Participacoes (which it has through its TI shareholding), or find a new partner for Vivo, its mobile business in the country.
In July, Telefonica said it would sell €750 million in bonds that convert to TI shares, weakening its influence over the Italian incumbent. The shares involved represented 6.5 per cent of its TI voting share.
It was announced last week that Vivendi had decided to conduct exclusive negotiations with Telefonica, after rejecting a rival €7 billion bid for GVT from Telecom Italia.
Telefonica said it would issue €3.4 billion in new shares to help finance the deal, but Alierta suggested that it could use treasury stock if market conditions make a capital increase difficult.
A Bloomberg report said Telefonica plans to sell shares in its Brazilian business to finance to majority of the GVT bid, leaving its financial options open for further deals.
Reuters speculated that TI’s failure to secure GVT could lead to the Italian company becoming a takeover target and make it more likely that it will sell its controlling stake in TIM Participacoes.