Telefonica looks to combine Brazilian network assets - Mobile World Live

Telefonica looks to combine Brazilian network assets

21 APR 2010

Spain’s Telefonica is to integrate its fixed-line and mobile networks in Brazil in a bid to revive the underperforming fixed-line arm, reports the Financial Times today. The Spanish group is to reportedly approach Portugal Telecom – its partner in local mobile firm, Vivo – over closer integration with its fixed-line arm, Telesp, which is struggling amid increasing competition. Telefonica is hoping that closer integration in areas such as network, marketing and back office functions could secure significant cost savings for both Telesp and Vivo. According to the report, Telesp has a market capitalisation of BRL16.7 billion (US$9.4 billion) but reported a 16 percent fall in earnings in the last three months of 2009 and has been marred by poor customer service. It is facing heightened competition in the local fixed-line market from the likes of France’s Vivendi, which last year bought Brazil’s fast-growing broadband operator, GVT.

Telefonica’s hopes of extracting more value from Telesp via closer ties with Vivo will depend on reaching an agreement with Portugal Telecom, with whom it has clashed in the past. Telefonica is long understood to have wanted to take full control of Vivo – Brazil’s largest mobile operator – but Portugal Telecom has insisted it wants to remain in Brazil for the long term. The Portuguese firm rejected an offer from Telefonica valued at more than EUR3 billion to buy its stake in 2007. Both Telefonica and Portugal Telecom declined to comment on today’s report.

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