Abstract
This teaching case studies the remarkable history of GVT, former Brazilian telecom company acquired by Telefónica Vivo after revolutionized the telecom industry in Brazil throughout its 15 years of operation. Telecommunications is an industry sector that faces constant turbulence, due to the fast-paced technological innovation and fierce competition, that forces the reinvention of business models in order to make companies thrive. Aimed at students from Masters and Doctorate programs in Administration, this case is useful for helping the professor to discuss in class about business models in a dynamic environment, as is the case of telecom industry. The learning objectives are to make participants able to comprehend features and limitations of traditional concepts of business models, guiding to the discussion of an alternative framework suitable to a dynamic environment context. The professor should cover the aspects of strategy of differentiation, consistent execution, process management and learning capabilities.
Highlights
The purpose of this teaching case is to study the remarkable history of Global Village Telecom (GVT), the former Brazilian telecom company which was acquired by Telefónica Vivo after it had revolutionized the telecom industry in Brazil throughout its 15 years of operation
He was interrupted by an unexpected visit from an approaching motorboat. This was CA, the CEO of Telefónica Group, a multi-billion Spanish telecom company, who handed over an envelope with a tempting proposal: he was offering € 6.7B (US$ 8.99B) to buy the Brazilian Global Village Telecom (GVT)1. What could explain this astonishing visit in such circumstances? It was just one more behind the scenes episode of the turbulent history of GVT, a Brazilian telecom company that had started from scratch 15 years earlier
SUMMARY OF THE CASE GVT entered Brazil as the first stage of the telecommunications sector was drawing to a close
Summary
The shareholders accepted the offer, and JBL, the CEO of Vivendi at the time, flew to Brazil in September 2009, to close the deal As soon as he arrived at the airport, he read in the newspaper that Telefónica, the huge Spanish telecom company which had extensive operations in Brazil, had raised the offer to R$ 48 per share, in what appeared a hostile takeover as it had not communicated its intention to the GVT executive management. Just after investing € 7.95B (US$ 11.3B) to buy a stake of 44% of SFR shares from the British company Vodafone (Vivendi had already 56% of its share, so achieved toissn 2358-0917 tal control), a new French competitor, Free, launched an aggressive quadruple play combo (bundling 4G mobile service with broadband Internet access, Pay TV service and a fixed telephone service) a few months later, for half the market price. This meant that AG would face some major challenges: how could the culture of GVT, together with its innovative approaches, be embedded in Telefónica, a much larger corporation?
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