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Vivendi Wants At Least €7 Billion for Brazil's GVT

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11/14/2012 | 04:15pm EDT

--Vivendi sees Brazilian phone business worth EUR7 billion to EUR8 billion

--"Multiple" offers expected for the carrier

--Vivendi focusing on media, content businesses

SAO PAULO--French telecom and media group Vivendi SA (VIV. FR, VIVEF, VIVHY) expects to receive "multiple" bids for its Brazilian phone company GVT, according to a person familiar with the process.

No bids have been made yet but offers are expected from Brazilian and international firms, the person said, adding that bidders must present their proposals before the end of the year.

Vivendi won't accept less than EUR7 billion ($8.9 billion) for GVT and will likely fetch between EUR7 billion and EUR8 billion, according to a second person with knowledge of the situation. This person said dates are "indicative, but not deadlines."

A spokeswoman for Vivendi said the company doesn't comment on market speculation.

Vivendi's management has been looking to refocus on the company's media and content assets, such as Universal Music Group and French pay-television company Canal Plus, according to people familiar with the matter, and is exploring the sale of GVT and its stake in African phone operator Maroc Telecom.

Better-than-expected results from both its media and telecommunications businesses pushed Vivendi to bump up its full-year earnings guidance and eased pressure on the company as it pursues the strategic review.

The Paris-based conglomerate said Tuesday that it now expects full-year adjusted net income of 2.7 billion euros ($3.43 billion) up from its previous projection of more than EUR2.5 billion. The new figure would represent an 8.5% decline on the year, compared with prior expectations of a roughly 15% decline.

Vivendi has hired Rothschild and Deutsche Bank AG to manage the sale process, according to people familiar with the process. Both banks have declined to comment.

The Brazilian unit GVT provides fixed-line and high speed Internet services, mostly in southern Brazil, although it has started expanding into other regions. At the end of the third quarter it covered 136 cities, with 8.2 million lines in service, a 42% increase from a year ago. The firm launched a pay-TV service less than a year ago and has so far signed up around 312,000 subscribers.

GVT has itself reported strong results. For the third quarter, it said revenue was up 23% from a year earlier at 1.1 billion Brazilian reais ($531 million), while earnings before interest, taxes, depreciation and amortization were BRL462.9 million, also up 23%.

Among companies that have shown interest in GVT are DirecTV (>> DIRECTV), Brazil's Oi SA (OIBR, OIBR4.BR, OIBRC), Mexico's America Movil SA (AMOV, AMX, AMX.MX), Telecom Italia SpA (TI, TIA, TIT.MI) and an investment fund of Brazil's Banco BTG Pactual SA (>> Grupo BTG Pactual), one of the people said.

Telecom Italia's Chief Operating Officer Marco Patuano said Tuesday that GVT is definitely something to look at "as you look at many other things," without offering more details. On Nov. 6, DirecTV said GVT is a "unique asset" that would offer strong synergies for its fast-growing Latin America business. DTV has started looking at the operator's books, but it was too early to consider a deal or how it may impact DTV's capital return policies.

Press representatives for America Movil, Oi and BTG Pactual declined to comment.

--Matthew Cowley in Sao Paulo and Manuela Mesco in Milan contributed to this article.

Write to Luciana Magalhaes at luciana.magalhaes@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Stocks mentioned in the article : DIRECTV, Grupo BTG Pactual
Stocks mentioned in the article
ChangeLast1st jan.
AMÉRICA MÓVIL, S.A.B. DE C.V. 1.30% 15.58 End-of-day quote.10.09%
EURO / BRAZILIAN REAL (EUR/BRL) 0.10% 4.603 Delayed Quote.3.60%
OI S.A. -1.43% 1.38 End-of-day quote.11.11%
TELECOM ITALIA 0.39% 0.5375 End-of-day quote.10.78%
TELECOM ITALIA 0.14% 0.5363 Delayed Quote.10.05%
VIVENDI -1.97% 24.92 Real-time Quote.19.45%
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