UPDATE 1-Telefonica Brasil preps $4 bln rights issue for Thursday -sources
(Adds detail of Cade decision)
By Guillermo Parra-Bernal and Leonardo Goy
NEW YORK/BRASILIA, March 25 (Reuters) - Telefonica Brasil SA plans to raise up to $4 billion in fresh capital through a rights issue that will be announced as early as Thursday to buy local broadband provider GVT, two sources with direct knowledge of the deal told Reuters.
On Wednesday Telefonica Brasil received the go-ahead from Brazil's anti-trust watchdog Cade for the 7.2 billion euro ($7.79 billion) acquisition of local broadband unit of Vivendi SA known as GVT.
Cade said the deal is dependent on certain conditions being met. These include the sale by Spanish parent company Telefonica SA of its stake in Telecom Italia, which owns rival Brazilian mobile operator Tim Participacoes SA.
The sources, who requested anonymity because the deal remains private, said Spain's Telefonica SA will buy $2.8 billion of the rights issue, with the rest placed with investors. Pricing of the issue is planned for April 16, the first source said, adding that Telefonica Brasil hired as many as 14 banks to handle the transaction.
Representatives at Telefonica Brasil and Telefonica in Spain declined to comment. Telefonica Brasil said on Friday it would hold a public share offering to buy GVT.
As well as the sale of Telefonica's 14.8 percent stake in Telecom Italia, Cade said Telefonica Brasil and GVT must maintain the reach and quality of their combined services. Neither can exit a city in which they operate for at least three years.
Cade also said Telefonica and Vivendi could not share information that would give them an unfair advantage in the Brazilian telecom market, including Telecom Italia.
Telefonica announced on Wednesday that GVT chief executive Amos Genish will become Chief Executive Officer of Telefonica Brasil after the acquisition is complete.
(Reporting by Guillermo Parra-Bernal; Additional reporting by Brad Haynes in Sao Paulo and Andres Gonzalez in Madrid; Editing by Diane Craft)
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