Brazil is on the line and global telecoms groups are racing to answer the call. Telefónica’s €2.6bn bid for GVT, a small but feisty Brazilian fixed-line operator, is the latest twist in the battle over the country’s burgeoning telecoms market. Madrid-based Telefónica hopes to force Vivendi, its French rival, off the field; in local currency, the Spanish group’s offer of 48 reals per share represented a 14 per cent premium over the R$42 per share that Vivendi bid for GVT last month.

As much as growth-hungry Vivendi would like a telecoms foothold in Latin America’s biggest and most vibrant economy, where broadband penetration is just 5 per cent and rising fast, Telefónica needs GVT more. Vivo, Telefónica’s Brazilian mobile joint venture, is growing like a weed, with revenues up more than a fifth last year. But Telesp, its fixed-line business, faces increased competition as Brazil’s landline industry evolves from a group of regional monopolies into a single national market. Buying GVT could prevent the upstart group from entering Saõ Paulo province, where Telesp dominates. Telesp, meanwhile, would gain a foothold in the country’s north and west, the better to compete with Oi, Brazil’s fixed-line leader.