Vivendi rules out full break-up of business

VIVENDI, THE media and telecoms conglomerate, has ruled out a full split of its business because of the problems it would cause in apportioning €14 billion of debt and the need to protect bondholders.

The future of the French company – owner of assets ranging from Activision Blizzard, the video games maker, to Universal Music Group and SFR, the telecoms operator – has been the subject of fevered speculation after it launched a structural review and said a break-up or the selling of assets was not “taboo”.

Philippe Capron, the company’s finance director, said yesterday, however, that a “straight break- up” between its telecoms and media businesses was “not something that we can contemplate for the time being”.

Vivendi has engaged bankers to explore how it could raise money from assets such as Activision and GVT, a fast-growing Brazilian fixed-line telecoms operator.

Its Maroc Telecom business in Morocco is another possible candidate.

However it said yesterday it was not ready to provide an update on possible asset sales or any other restructuring of the business short of a full break-up.

Vivendi launched the strategic review after a sharp fall in its share price this year led some investors to question its “conglomerate discount” – the difference between its market capitalisation and the probable value of its assets.

The company subsequently parted company with chief executive Jean-Bernard Lévy at the end of June because of a disagreement over the new strategy.

Mr Dubos’s comments came as Vivendi announced a 17 per cent fall in first-half net income to €1.5 billion over the same period last year, in part because of a domestic mobile price war but also because of a big hike in French taxes.

However, shares in the company rose 3.6 per cent to €15.66 after it said it hoped earnings before interest, tax and amortisation would be significantly better than its €2.5 billion target this year. The shares have risen about 10 per cent since Mr Lévy’s departure.

Vivendi said it also hoped debt would be cut to “well below” its current level as it looks to maintain its cherished triple-B credit rating. – Copyright The Financial Times Limited 2012