Brazil opening hearings on Telefonica's GVT bid

Brazilian federal prosecutors on Tuesday said plans by Spain's Telefonica to purchase rival GVT could limit competition and reduce service quality, and they opened public hearings that could slow the possible tie-up.
Investors see Telefonica as the likely buyer of GVT even as giant French media company Vivendi is also eyeing the company in a move that could bring a new player to south-central Brazil's broadband market, currently dominated by local conglomerate Oi.
But the Prosecutor General's office worries that the acquisition, which could cost Telefonica up to 7 billion reais ($4 billion), could further worsen service in its home Sao Paulo state market, which has already suffered five major outages this year.
The entry of a new player has long been seen as a welcome opportunity to break the near-stranglehold on broadband in Sao Paulo held by Telesp and rival Net Servicos de Comunicacao. Telesp subscribers suffered five service blackouts or similar incidents between July 2008 and June this year.
The deal has become a litmus test for the government and regulators, a year after industry rules were overhauled to allow for the President Luiz Inacio Lula da Silva-sponsored takeover of Brasil Telecom by Oi.