vivo20140829_6k.htm - Generated by SEC Publisher for SEC Filing





Washington, D.C. 20549






For the month of August, 2014


Commission File Number: 001-14475





(Exact name of registrant as specified in its charter)



(Translation of registrant’s name into English)


Av. Eng° Luís Carlos Berrini, 1376 -  28º andar

São Paulo, S.P.

Federative Republic of Brazil

(Address of principal executive office)



Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:


Form 20-F



Form 40-F



Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):






Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):












Publicly-Held Corporation

CNPJ MF 02.558.157/0001-62 - NIRE


Telefônica Brasil S.A. ("Company"), in compliance with Ruling No. 358 of January 3rd, 2002, of the Brazilian Securities Exchange Commission (Comissão de Valores Mobiliários - CVM), as amended, complementing the Material Fact dated as of August 28th, 2014, announces to the market and to the general public that the Board of Directors of Vivendi S.A., in a meeting held on August 28th, 2014, has accepted to grant exclusivity to Telefónica, S.A. and the Company, for a period of three (3) months, for the negotiations regarding the acquisition of the total capital stock of Global Village Telecom S.A. (“Transaction”).

Attached to this Material Fact is a descriptive presentation of the main proposed steps for the structuring of the Transaction, as well as some projections regarding the financial data related to it. It should be emphasized, however, that all information contained in the presentation is based on preliminary studies.

São Paulo, August 29th, 2014.

     Alberto Manuel Horcajo Aguirre
Diretor de Relações com Investidores
Tel: +55 11 3430-3687 Email:






This document contains statements that constitute forward looking statements about Telefonica Brasil S.A. (going forward, “the Company” or Telefonica Brasil or VIVO) including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which may refer, among others, to the intent, belief or current prospects of the customer base, estimates regarding, among others, future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the Company.


The forward-looking statements in this document can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions. Such forward-looking statements, by their nature, are not guarantees of future performance and involve risks and uncertainties, and other important factors that could cause actual developments or results to differ from those expressed in our forward looking statements. These risks and uncertainties include those discussed or identified in fuller disclosure documents filed by Telefonica Brasil with the relevant Securities Markets Regulators.


Analysts and investors, and any other person or entity that may need to take decisions, or prepare or release opinions about the securities issued by the Company, are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation.


Except as required by applicable law, Telefonica Brasil undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telefónica Brasil’s business or acquisition strategy or to reflect the occurrence of unanticipated events.


This document may contain summarized information or information that has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information, including if it is necessary, any fuller disclosure document published by Telefonica Brasil.


Finally, it is stated that neither this presentation nor any of the information contained herein constitutes an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange of securities, or any advice or recommendation with respect to such securities.



Investor Relations  
Telefônica Brasil S.A. 2



Transaction Summary


Telefónica and Telefónica Brasil have entered into an exclusivity agreement with Vivendi in relation to their binding offer to acquire 100% of GVT

Total implied consideration for 100% of GVT of €7.45bn, through a combination of cash and a stake in the enlarged Telefónica Brasil

(i) €4.66bn of cash, financed through a capital increase at Telefónica Brasil

(ii) 12.0% stake in the enlarged Telefónica Brasil (after capital increase)

Telefónica offered Vivendi the opportunity to swap, a 4.5% stake in the enlarged Telefónica Brasil in return for a voting stake of 8.3% in Telecom Italia held by Telefónica

Vivendi to decide at the time of signing of the definitive agreements if it wishes to receive the Telecom Italia shares

Cooperation between Telefónica and Vivendi’s subsidiaries globally for the distribution of media content

Transaction to unlock significant value, with synergies of at least €4.7bn NPV

Exclusivity period of 3 months

Signing of definitive agreements after Vivendi’s workers’ council review

Telefónica Brasil shareholders’ approval required at Telefónica Brasil’s General Meeting

Transaction expected to close in mid 2015, following clearance from relevant authorities


Investor Relations  
Telefônica Brasil S.A. 3


Proposed Transaction Structure


Transaction Summary



Total consideration of 7.45bn

Acquisition of GVT by Telefónica Brasil for a combination of cash and a stake in the enlarged Telefónica Brasil

i. 4.66bn in cash, financed through a capital increase at Telefónica Brazil

ii. 12.0% stake in the enlarged Telefónica Brasil (after capital increase)

Vivendi could request that, Telefónica exchanges 1,110m Telecom Italia ordinary shares (8.3% of voting capital) it owns for 4.5% stake in the enlarged Telefónica Brasil



Investor Relations  
Telefônica Brasil S.A. 4



Transaction Rationale

Strong NGN with more than 10.4m Homes Passed in 152 cities/21 Brazilian states

More than 2.5m UBB clients (86%>10Mbps), of which 92% outside Sao Paulo

Sustained double-digit growth (26% revenue CAGR 10-13) with further potential

Strong management track record underpinned by impressive operating and financial performance


Leading integrated operator with nationwide footprint and a 29% revenue share


Leader in mobile and UBB, well positioned in high value segments in both services

Enables Telefónica Brasil to offer high quality quad-play products

Accelerating growth profile both at Telefónica and Telefónica Brasil

Reinforced competitive positioning:


Mobile: bundling services and supporting LTE deployment by leveraging GVT’s extensive fiber network

Fixed in Sao Paulo: optimizing fiber deployment by transferring operational best practices to VIVO

Corporate/SME: improving profitability, competitive positioning and quality of services by migrating to owned infrastructure


Investor Relations  
Telefônica Brasil S.A. 5


Transaction Rationale (Cont’d)

NPV of total synergies of at least 4.7bn, net of integration costs
  Net savings from year one

Annual run-rate of operating and revenue synergies of at least 450 m; c70% of run-rate synergies by year 2017

Revenue synergies (20% of the total):
  Cross-selling synergies on similar customers profile, corporate and wholesale
  Improved customer satisfaction and loyalty
OpEx and CapEx synergies (49% of the total):

Leveraging GVT’s fibre network for LTE deployment 

  Lower direct costs as a result of higher scale
Incremental value from additional financial, fiscal and other synergies (31% of the total)
Highly experienced management team with a proven track record of integration
Accelerating growth profile
Unlocks significant value for Telefónica Brasil shareholders
Improved profitability and enhanced cash flow generation for enlarged entity
Increases financial flexibility, with no incremental leverage
Maintaining optionality for potential additional sector evolution


Investor Relations  
Telefônica Brasil S.A. 6





Investor Relations  
Telefônica Brasil S.A. 7



Source: Company filings, Anatel and Teleco; Converted to using average 2013 R$/FX rate

1. Considers retail and corporate segments; Considers América Móvil Brazil only; Considers Oi standalone

Investor Relations  
Telefônica Brasil S.A. 8


Identified Synergies of at least 4.7bn NPV


Investor Relations  
Telefônica Brasil S.A. 9


Synergies Value of at Least 4.7bn NPV


NPV at least 4.7bn:
  Net savings from year one
  Run-rate operating and revenue synergies at least 450 MM from year 2020; c70% of
  run rate by 2017


Investor Relations  
Telefônica Brasil S.A. 10


Attractive Transaction for Telefónica Brazil Shareholders
Pro forma Financial Impact on Telefónica Brazil based on Broker Consensus estimates



Source: Broker consensus, not adjusted for differences in accounting policies

1. Defined as OIBDA-Capex

2. 2015 post includes run rate synergies

Investor Relations  
Telefônica Brasil S.A. 11


Transaction Entirely Financed with Equity



Transaction entirely financed with equity at both Telefónica and Telefónica Brasil


The cash consideration to Vivendi will be fully financed through a capitalincrease at Telefónica Brasil


Telefónica will subscribe its proportionate share of 73.9%, or 3.4 bn,which, in turn, will be funded through a capital increase at Telefónica level


  Transaction to strengthen Telefónica Brasil’s results and balance sheet

Consolidation of GVT financials and value creation from synergies


Investor Relations  
Telefônica Brasil S.A. 12


Expected Transaction Timetable



Investor Relations  
Telefônica Brasil S.A. 13


Closing Remarks: The perfect fit

A natural strategic move to improve market positioning and growth profile while improving
  financial flexibility
Telefónica Brazil to sustain as the leader in subscribers and network quality
Creating a leading integrated Telco in Brazil with a nationwide footprint and high value
  customer profile, in the largest telecoms market in LatAm
Significant value creation through at least 4.7bn NPV synergies crystallization
Substantial value creation for Telefónica Brazil shareholders
  Improving growth profile and market positioning, while maintaining intact further optionality
  Enhancing cash flow generation profile


Investor Relations  
Telefônica Brasil S.A. 14






Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.






August 29, 2014



/s/ Luis Carlos da Costa Plaster






Luis Carlos da Costa Plaster






Investor Relations Director