Industries
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* Q1 revenue 7.2 bln euro vs consensus 6.95 bln euro
* Q1 EBIT 1.7 bln euro vs consensus 1.52 bln euro
* French telecom unit struggles, while Brazil's booms
* Confirms 2011 guidance for group operating profit
(Adds results, writes through)
By Leila Abboud
PARIS, May 12 French telecom and entertainment group Vivendi SA (VIV.PA) posted higher than forecast first-quarter results on Thursday as strong video game sales offset weakness at its telecom unit SFR.
Earnings before interest and taxes (EBIT) jumped 7.2 percent to 1.7 billion euros ($2.4 billion) against an average forecast of 1.52 billion from nine banks and brokerages polled by Reuters, on revenue up 3.8 percent to 7.2 billion, versus a forecast 6.95 billion.
The company said it "confirmed and refined" its targets for the year, calling for a slight increase in adjusted net income, excluding the sale of its stake in NBC Universal and before the acquisition of minorities in SFR.
After the SFR deal, it said adjusted net income would be above 3 billion euros and it would increase its dividend.
The first-quarter results highlighted the divergent paths of Vivendi's varied business.
Its video game unit Activision Blizzard (ATVI.O) is booming and on Monday posted higher profit and revenue, driven by sales of online games, and raised its yearly guidance. [ID:nN09249618]
"The situation at Activision Blizzard remains very healthy," Chief Financial Officer Philippe Capron told a conference call.
Vivendi's Brazilian fixed telecom business GVT was also a bright spot. Its revenue soared 54 percent to 329 million euros and EBITA more than doubled to 90 million.
GREENFIELD DEVELOPMENTS
Chief Executive Jean-Bernard Levy told the Financial Times in an interview published on Thursday he would consider acquisitions in pay-TV, music and video games to "fill the pipes" of GVT with content and services.
But Capron tempered that message, saying: "We are willing to explore any relevant development avenues in Brazil. In our minds it will mostly take the form of greenfield developments, you should not expect major acquisitions."
Meanwhile the performance at France's second-biggest telecom operator SFR, which generates 40 percent of Vivendi's revenue and earnings, was lackluster.
SFR revenue slipped 0.9 percent to 3.06 billion euros, while its earnings before tax, interest, depreciation and amortisation (EBITDA) fell almost 11 percent to 566 million.
SFR's margins were eroded by France's hike in value-added tax on telecom services and by price wars with its rivals France Telecom FTE.PA and Bouygues (BOUY.PA).
France's major telecom operators are girding for the arrival of a fourth mobile operator Iliad (ILD.PA) next year and going on the commercial offensive to lock in clients before then.
SFR's margin on mobile services, an indicator closely watched by the market, fell 8.6 percentage points from a year earlier.
The fate of SFR is central to Vivendi, especially since it has agreed to buy out Vodafone's 44 percent stake in the operator for 7.95 billion euros. [ID:nLDE71O0VT]
Capron said SFR had a challenging quarter but its fundamentals remained very healthy. He added that the turbulence around the tax hike, which allowed customers a window to break long-term contracts and defect to rivals, had abated by March.
Vivendi shares closed 1.6 percent lower to 19.11 euros before the results were announced. Since the beginning of the year, Vivendi's shares are down 3.9 percent, while the STOXX Europe 600 Media Index .SXMP is up 0.6 percent. (Editing by David Holmes) ($1=.7045 Euro)
