PARIS Vivendi (VIV.PA) is considering splitting off its biggest unit, French mobile telecoms operator SFR, and putting a chunk of the group's debt into the subsidiary, Bloomberg said on its news website on Wednesday.
Shares in Vivendi closed up 4.4 percent at 16.22 euros following the report, which said no final decision had been made and Vivendi could still opt for an alternative strategy.
A company spokesman declined to comment on the report. "Vivendi is interested in maximizing value for SFR and at this stage any other speculation would be very premature," he said.
Vivendi has been in the midst of a portfolio review and strategy revamp, saying it wants to reduce exposure to capital-intensive, mature telecoms businesses to focus more on its media activities in music and pay-TV.
But it has already unsuccessfully tried to sell its Brazilian telecom unit GVT and its 61 percent stake in video game business Activision Blizzard (ATVI.O) and is still working on the sale of its 53 percent stake in Maroc Telecom (IAM.PA).
The question of what to do with SFR, which accounts for about 40 percent of Vivedi's group sales, is more complicated. There are no obvious strategic buyers for the asset and a merger with another French mobile operator has essentially been ruled out for now by competition regulators.
France's telecom market is also in the throes of a price war sparked by new mobile player Iliad (ILD.PA), which has pushed valuations lower and complicated any possible deal-making.
A spin-off of SFR would mark a reversal of strategy for Vivendi, which in April 2011 bought out SFR's co-owner Vodafone (VOD.L), paying 7.95 billion euros for the UK company's 44 percent stake.
Vivendi has in the past held talks with French cable operator Numericable over a tie-up with SFR but they foundered over valuation issues and deal structure, sources earlier told Reuters. SFR is also eyeing options for network sharing deals to reduce capital expenditures including with Bouygues Telecom (BOUY.PA).
The group is expected to give an update on its strategy at its annual shareholders' meeting on April 30.
(Reporting by Leila Abboud; Editing by Greg Mahlich)