Global telecom major, Telefonica SA yesterday raised its takeover bid for Brazilian fixed line operator GVT (Holding) SA by over 5 per cent to R$50.50 (50.50 Brazilian reais) a share, amounting to R$6.95 billion (approximately $4 billion), eclipsing French rival Vivendi's September offer by around 20 per cent.

Telephonica's earlier offer was R$48 per share of GVT, while the French media conglomerate Vivendi offered $42 a share.

Through the acquisition of GVT, Telefonica aims to expand its fixed-line and broadband operations outside its base, Sao Paulo, while rival Vivendi intends to make an entry into the Brazilian fixed-line and internet market.

''The price has been increased to improve the offer's prospects of success. Moreover, it confirms the Company's capacity to proceed with the transaction and underlines its intention to acquire 100 per cent of the shares of GVT,'' Telefonica said in a statement.

The telecom major further said the revised bid was based on GVT's outstanding third quarter results which confirmed Telefonica's long-term expectations regarding the company's fundamentals. It further stated that the new price does not alter the legal or regulatory aspects of the bid.

The decision came one day after GVT shareholders approved to remove the so-called 'poison pill clause' from the company's bylaws that prevent takeover bids by a single shareholder.

Both Telefonica and Vivendi had set preconditions for the removal of the clause to proceed further with their takeover bids.

Curitiba-based GVT is a provider of fixed line, broadband/ISP, VoIP services in center-west, southern and northern regions of Brazil, with a focus on high-usage and high-margin customers and has a customer base of 2.6 million. Its controlling shareholders are the Swarth Group and Global Village Telecom (Holland) BV.

The company reported 27-per cent increase in revenue at $256 million, compared with the same quarter in 2008. The net income was $33 million over a loss of 14.8 million last year.

However, some analysts are of the opinion that the new offer is very high for the telecom asset.

On obtaining the required approval from Anatel, the local telecom regulator, Telefonica intends to hold an auction to buy the GVT shares which is set for 19 November.

Vivendi declined to comment on the development and said it is reviewing the options, although some analysts consider that it may be good news for Vivendi as it would allow it not to chase the deal and claim break-up fees. Earlier in September, GVT signed an agreement to sell at least 20 per cent stake to Vivendi.

Telephonica is a global telecommunication giant with presence in Europe, Latin America and Africa, and the largest operator in Spain, with a total customer base of around 264 million. In Latin America, the company is a leading operator in Brazil, Argentina, Chile and Peru and has substantial presence in other countries. Total number of customers in Latin America is over 160 million as at June 2009.

GVT shares closed 1.3 per cent higher at R$51.65 yesterday on the Brazilian Stock Exchange, which is 2.3 per cent higher than Telefonica's offer price.