Vivendi has picked Telefonica for exclusive talks over the sale of its Brazilian broadband unit GVT, spurning a rival bid from Telecom Italia.

Telefonica will fold GVT into its Brazilian mobile phone carrier Vivo to create the country’s biggest telecom group. It will then use GVT’s pay-TV and broadband know-how and its broad network to chase higher-value customers and keep profits growing as mobile subscriber growth slows.

Vivendi’s decision is a blow to Telecom Italia, which needed GVT to shore up its own Brazilian mobile business Tim Participações, which lacks a fixed-line network.

For Vivendi, the GVT sale caps a turbulent two-year overhaul in which it sold three telecom businesses and its video games arm to pay down debt and focus more on media and content.

“The Telefonica offer best meets the group’s strategic and financial objectives,” said the French company.

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