UPDATE 1-Vivendi wants at least 7 billion euros for GVT-sources

Wed Nov 7, 2012 2:38pm GMT

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* GVT sale comes as Vivendi plans to exit telecom

* Price tag no less than 7 bln euros, source says

* Oi, America Movil, DirecTV among early bidders

* Vivendi eyes Brazil for media, content projects

By Guillermo Parra-Bernal and Leila Abboud

SAO PAULO/PARIS, Nov 7 (Reuters) - France's Vivendi SA seeks to raise at least 7 billion euros ($8.9 billion) from the sale of Brazilian unit GVT and has attracted expressions of interest from at least four bidders, said two sources with direct knowledge of the situation.

Both sources, who requested anonymity because of the sensitivity of the issue, said Brazil's Grupo Oi SA, Mexico's America Movil SAB, DirecTV and Telecom Italia SpA were taking part in initial talks involving GVT. Several investment funds have also shown interest in GVT, one of the sources added, without elaborating.

Vivendi, which is selling assets to cut debt and boost its flagging share price, aims to receive binding offers for GVT in the first quarter, both sources said. The GVT sale is a sign that Paris-based Vivendi is looking to scale back its presence in telecommunications to focus more on its media assets, the sources said.

Vivendi decided to put GVT on the block this summer as it undertakes a review of its portfolio of businesses in mobile telephony, video games and music. Europe's largest media and telecommunications conglomerate is also seeking a buyer for its controlling stake in Maroc Telecom.

"Synergies between GVT and other Vivendi units were not as strong as the company first imagined," one of the sources told Reuters. "But that doesn't mean that Vivendi will go on a New Year's sale mode and sell off GVT at any price. There is no way that will happen."

Vivendi shares are up 28 percent since early April on hopes that management could remake the company, keep robust dividend payouts and protect the company's investment-grade rating.

The stock had shed 68 percent between January 2011 and March this year, as investors questioned Vivendi's telecom-and-media structure as well as its ability to sustain growth and profits given tough competition for its French telecom unit, SFR.

A spokesman for Vivendi declined to comment.

Calls to the media offices of Rio de Janeiro-based Oi and Mexico City-based America Movil were not immediately answered. DirecTV Chief Executive Officer Mike White told investors late on Tuesday that the U.S.-based satellite TV provider was in the early stages of evaluating a takeover proposal for GVT.

A Telecom Italia spokesman did not have an immediate comment.

AMBITIOUS PRICE TAG

GVT, an alternative provider of fixed telephone, broadband, and TV services in 120 Brazilian cities, has been a major driver of Vivendi's growth in recent years.

The 7 billion euro price tag for GVT could prove ambitious as the bidding process moves ahead. At that price, GVT would be valued at 8 times 2013 estimated earnings, well above the average 5.5 times valuation for Oi, America Movil and other Latin American peers, according to Thomson Reuters calculations.

Bankers not involved in the deal told Reuters that high debt levels at Telecom Italia and Oi might prevent them from bidding for GVT. Antitrust concerns might also pose an obstacle to a bid by Oi, both sources noted.

America Movil, the telecom giant controlled by the world's richest man, Carlos Slim, may balk at paying the high valuation Vivendi is seeking, the sources added. Slim's expansion strategy in Latin America and Europe has been to target companies that he sees as undervalued.

One of the sources said a sale of GVT did not imply that Vivendi would exit Brazil. "Brazil is a strong market for content and media," the source added. "Vivendi is No. 1 in music thanks to Universal Music Group ... there is strong demand for videogames" in the country.

The source declined to say whether Vivendi is already eyeing potential targets in those sectors in Latin America's largest economy. Brazil would also be a strong entry platform for other countries in the region, the source noted.

Vivendi paid about 3 billion euros for GVT in late 2009, outbidding Spain's Telefonica SA. The unit, bankrolled with 2 billion euros from Vivendi, has spent heavily to build its high-speed fiber broadband network.

Telefonica, which analysts and bankers had seen as another possible bidder for GVT to build on its footprint as the owner of top Brazilian mobile operator Vivo, is not participating in the process, both sources said.

The investment banking units of Deutsche Bank AG and Rothschild & Co. are advising Vivendi on the sale of GVT.

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