February 25, 2014 / 8:20 AM / 4 years ago

RPT-UPDATE 2-Vivendi silent on future ahead of SFR spin-off

(Repeats to add Breakingviews link)

* 2013 revenue down 2 pct, adjusted EBITA down 23 pct

* Shares biggest faller on French blue-chip index

* SFR exploring “all potential opportunities”, (Adds analyst, trader comment, share price fall)

By Lionel Laurent and Gwénaëlle Barzic

PARIS, Feb 25 (Reuters) - French media-and-telecoms company Vivendi held off giving forecasts or proposing dividends ahead of spinning off its domestic mobile brand SFR, rattling investors who were hoping for some indication on a possible payout.

Vivendi aims to spin off the SFR division, which has suffered from an intense price war in France, as part of a broader company restructuring to pay down debt and focus on media.

Analysts had expected Vivendi to comment on the 2013 dividend and the return of some proceeds from asset sales to shareholders on Tuesday, when it reported a fall in underlying annual profit in line with forecasts.

But Vivendi, which also owns Universal Music, French pay-TV channel Canal Plus and Brazilian telecom operator GVT, said only that the board was still reviewing the cash payout that would be offered to investors.

The lack of outlook from Vivendi - which has also announced the sale of the bulk of its stake in video-games unit Activision Blizzard and operator Maroc Telecom as part of its overhaul - dragged the company’s shares down more than 3 percent, the worst performer on the French blue-chip CAC-40 index.

“They have given no indication of what is going to happen,” said Francois Chaulet, fund manager at Montsegur Finance, which owns shares in Vivendi.

“They want to have the largest possible room for manoeuvre on what they decide to return in cash...But for now buying Vivendi shares is almost like writing a blank check to management,” he said.

Chief Financial Officer Herve Philippe declined to comment further on SFR after Vivendi confirmed on Monday it had been approached by cable group Altice over a tie-up between the mobile brand and cable firm Numericable.

Vivendi said on Tuesday it would use SFR to take part in consolidation in France’s telecoms sector, “exploring actively all potential opportunities”.

Although SFR would typically be an attractive target for rival mobile brands like Bouygues or low-cost upstart Iliad, mergers among mobile operators are unlikely for now because of opposition from competition regulators who fear higher prices for consumers.

Likely alternatives would include a tie-up with cable-focused Numericable, a straight spin-off, a stock market listing or an extension of network-sharing deals such as the one recently struck with Bouygues.

The drive to shed assets and bring in a new management team under the chairmanship of billionaire Vincent Bollore has lifted Vivendi’s share price over the past six months. The sale of most of Vivendi’s stake in Activision Blizzard helped drive its 2013 net profit up tenfold to 1.97 billion euros.


Vivendi reported a 23 percent annual fall in adjusted earnings before interest, tax and amortisation (EBITA) to 2.4 billion euros ($3.3 billion), hit by moves to lower costs and prices at SFR. Revenue fell 2 percent to 22.1 billion euros.

Philippe said the results were in line with the company’s guidance.

Vivendi booked a 2.4 billion euro writedown on the acquisition value of SFR, though it was more than offset by the capital gain from selling shares in Activision Blizzard.

Vivendi has also announced the sale of its Maroc Telecom stake to United Arab Emirates operator Etisalat, which Vivendi’s CFO said is due to be completed in a matter of weeks.

Analysts had expected revenue of around 22.3 billion euros, gross operating profit of around 2.4 billion and net income of 1.4 billion, according to the average of analyst forecasts compiled by Thomson Reuters I/B/E/S.

SFR, hurt by intense price competition from mobile upstart Iliad, reported a 16.2 percent drop in earnings before interest, tax, depreciation and amortisation (EBITDA) for 2013 to 2.77 billion euros.

SFR’s subscriber base rose by 756,000 subscribers to 21.354 million in 2013.

Pay-television unit Canal Plus met guidance with EBITA of 661 million euros, down 1.9 percent.

The company’s two other divisions, Universal Music Group and Brazilian telecom brand GVT, saw a rise in core earnings to meet guidance.

$1 = 0.7285 euros Additional reporting by Alexandre Boksenbaum-Granier; Editing by Erica Billingham

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