Vivendi's profit beats forecasts

Jean-Bernard Levy, Chairman of the Management Board and Chief Executive Officer of Vivendi, speaks during a news conference to present the company's 2006 full year results in Paris March 7, 2007. Vivendi reported forecast-beating first-quarter profits on Tuesday, driven by its pay-TV, video games and Moroccan telecoms businesses, and it said again it was interested in buying out Vodafone from its French mobile phone group SFR.

PARIS (Reuters) - Vivendi reported forecast-beating first-quarter profits on Tuesday, driven by its pay-TV, video games and Moroccan telecoms businesses, and it said again it was interested in buying out Vodafone from its French mobile phone group SFR.

"We have made it clear that we would be willing to discuss the acquisition of the shares of SFR presently held by Vodafone," Vivendi's finance director Philippe Capron told reporters and analysts in a conference call.

Vivendi owns 56 percent of France's second-biggest mobile operator while Vodafone owns 44 percent.

"We are only keeping the thought that this would be a good idea," Capron said.

The French media and telecoms group posted earnings before interest, tax and amortization (EBITA) of 1.3 billion euros ($1.76 billion), beating the average forecast of 1.023 billion euros given in a Reuters poll of 10 analysts.

The group, which also owns the world's biggest record company Universal Music Group (UMG), reaffirmed its forecast of net adjusted profits for the year of at least 2.7 billion euros.

"An excellent performance in video games and a good surprise at Canal Plus ... so in spite of the disappointment in music, the group is well positioned to beat expectations for the year," said Bruno Hareng, an analyst at Oddo Securities.

"I think the shares should react positively," he added.

Vivendi's shares closed before the results were released, up 0.29 percent on the day at 30.85 euros.

Vivendi's net adjusted income reached 771 million euros in the first quarter, beating expectations of 620.8 million euros based on a Reuters poll and compared with 628 million last year.

A significant part of first-quarter operating profit growth came from Maroc Telecom and pay-TV unit Canal Plus which recently merged with its rival TPS.

"We have had a very good start of the new group," Capron said about the new entity called Canal Plus France.

Canal Plus group, which includes Canal Plus France and other activities such as film production, saw its total EBITA rise fivefold to 164 million euros on revenues up 19 percent to 1.067 billion euros.

Meanwhile, Maroc Telecom posted a 20 percent rise in EBITA to 256 million euros.

GAMES BOOST

Vivendi games continued to cash in on the popularity of its World of Warcraft games and extension packs of Burning Crusade.

"We are running out of superlatives for Vivendi games," Capron said.

The video games unit generated EBITA up 4.7 times to 107 million euros in the first three months of the year.

Vivendi's traditionally two largest businesses SFR and UMG confirmed analysts expectations of declining sales and profits as the mobile operator was hit by a maturing market and lower prices and piracy continued to harm music sales.

UMG saw EBITA decline to 57 million euros from 141 million euros on the back of an 8.7 percent drop in revenue to 1.027 billion euros.

Vivendi said "very strong" sales in the UK had been dented by declines in the U.S., Japan and France amidst difficult market conditions.

SFR also incurred a drop in operating profit, down 3.5 percent year on year to 643 million euros, which was also hit by depreciation costs related to high-speed network investments.

Revenue at SFR fell 1.8 percent to 2.1 billion euros, with average revenue per user (ARPU) decreasing by 6 percent to 450 euros at the end of March.

Vivendi's total turnover rose 5.3 percent, or 7 percent at constant currency rates, to 5.020 billion euros.