Bloomberg News

DirecTV Said to Contemplate Bid for Vivendi’s GVT Unit

September 19, 2012

DirecTV Said to Contemplate Bid for GVT

DirecTV, the largest U.S. satellite-television provider, is counting on surging demand for pay-TV and Internet service in Latin America as growth subsides in its home market. Photographer: Paul Taggart/Bloomberg

DirecTV is one of several companies seeking information to evaluate a bid for Vivendi SA (VIV)’s Brazilian phone unit GVT, according to two people familiar with the matter.

Europe’s biggest media and telecommunications group is preparing a list of interested parties that will have access to GVT’s financial data, said one of the people, who asked not to be identified because the talks are private. The deadline for a first round of bids hasn’t been set, the person said.

DirecTV, the largest (DTV:US) U.S. satellite-television provider, is counting on surging demand for pay-TV and Internet service in Latin America as growth subsides in its home market. The company lost (DTV:US) clients for the first time last quarter in the U.S., while its Latin American customer base expanded 36 percent from a year earlier.

Darris Gringeri, a spokesman for El Segundo, California- based DirecTV (DTV:US), declined to comment, as did a Vivendi representative who asked not to be named under company policy.

DirecTV’s conversations with Vivendi are still at an early stage and may not lead to a bid, said one of the people familiar with the matter.

Vivendi rose as much as 3 percent to 15.70 euros and traded 2.1 percent higher as of 9:53 a.m. in Paris. DirecTV fell 1.4 percent to $53.44 in New York yesterday.

Vivendi hired Rothschild and Deutsche Bank AG to study options for GVT including a sale or an initial public offering, people familiar with the situation said last month.

Brazil Internet

DirecTV, which trails only billionaire Carlos Slim’s America Movil SAB in Latin American TV subscribers, began offering high-speed Internet access last year in Brazil over a wireless network. The company acquired rights to regional airwaves for Internet services in a June government auction.

GVT, which Vivendi agreed in 2009 to acquire for $4.18 billion after trumping a bid from Madrid-based Telefonica SA (TEF), has helped expand the Paris-based media company’s revenue and may be worth 5.2 billion euros ($6.4 billion), according to estimates in April by Morgan Stanley.

Vivendi Chairman Jean-Rene Fourtou is analyzing an overhaul of the company’s structure after the stock fell to a nine-year low in April. Moody’s Investors Service and Fitch Ratings have said that Vivendi’s debt rating may be cut unless it reduces liabilities.

Fourtou assumed responsibility for strategy since Chief Executive Officer Jean-Bernard Levy was ousted in June. The Vivendi chairman is evaluating whether to reduce the emphasis of the group’s telecommunications businesses, which he believes lack scale and require too much investment, people familiar with the matter said in June.

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Nick Turner at nturner7@bloomberg.net


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