GVT gets $663M loan to fuel Brazilian expansion

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Telecom operator GVT Holding SA (GVTT3.BR), owned by French entertainment and telecom group Vivendi, has been approved for a loan of U.S. $663 million (R$1.184 billion) from Brazilian development bank BNDES. The loan is intended to complement the company’s investment plans through 2013, which are aimed at expanding current business areas and new cities, as well as pay-TV operations and implementing innovation in telephony services and Internet bandwidth range, content and interactivity.

GVT plans to double its staff this year, jumping from 7,900 in December 2010 to more than 14,200. The company maintains its own customer-service staff, which includes call-center workers and onsite service technicians.

This month, GVT announced plans to expand its operations to 13 new cities in Brazil, as result of investment of U.S. $57 million (R$ 100 million).

In the third quarter, GVT saw net revenue rise 38.4% to U.S. $502 million (R$893.5 million). The number of lines in service in the customer base increased 50.1% to 5.78 million as a result of territorial expansion, reaching three new cities as part of a plan to expand its services for eight new municipalities in the first nine months of the year.

Investment in the quarter totaled U.S. $261.9 million (R$465.9 million). For the year, GVT has invested U.S. $674.8 million (R$ 1.2 billion), an increase of 51.2% compared with the first nine months of 2010. During the Futurecom event this year, GVT said that it plans to invest U.S. $5.85 billion in Brazil through 2016.

In September, GVT announced its plans to investment of U.S. $380 million (R$ 650 million) through the end of 2012 to launch pay TV in the country. The move is an important departure for GVT, which has focused on providing fixed-telephony and broadband. GVT expects that within five years, revenue from TV may contribute more to the carrier’s business than telephony or Internet broadband.

A recent survey from consulting firm Frost & Sullivan shows that the investments in the telecommunications market is at its highest since the Brazilian privatization in 1998. Together, the investments of the biggest telecommunications groups are expected to total about U.S. $35 billion (R$62.8 billion) from 2011 to 2016.

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