Vivendi beats profit target despite SFR’s performance; delays GVT sale

26 Feb 2013

French entertainment and telecoms conglomerate Vivendi says it beat its full-year earnings target for 2012, despite a fall in profits at its French telecoms unit SFR. Reuters adds however that Vivendi, which is currently undertaking a strategic review of its business, declined to provide any forecasts for the current financial year until it has a firmer idea on where it stands with its plans to sell some assets. Although it says it is in no hurry to dispose of any of its businesses, it is known to be considering the sales of its 53% stake in Maroc Telecom and Brazilian alternative operator Global Village Telecom (GVT), as it looks to trim debt and reduce its exposure in the ‘capital-intensive’ telecoms market. Vivendi CFO Philippe Capron confirmed that the company will bide its time to secure the right price for the units, with Les Echos noting that Vivendi has so far failed to obtain offers near its preferred price of EUR7 billion (USD9.2 billion) for GVT and was subsequently delaying the sale.

Vivendi posted full-year adjusted net income of EUR2.86 billion before exceptional items to beat its target of profit of EUR2.70 billion. Full-year revenue rose 0.6% year-on-year to EUR28.99 billion, broadly comparable with the average estimate in a Thomson Reuters analyst poll of EUR28.51 billion.

The group’s troubled French telco SFR saw full-year revenues fall by 7.3% to EUR11.29 billion, due to what Vivendi terms ‘the progressive impact of price cuts related to the competitive environment and to price cuts imposed by the regulators’. Excluding the impact of these regulatory decisions, revenues decreased by 3.3% on an annualised basis. EBITDA amounted to EUR3.29 billion, a 13.2% decrease compared to 2011. Excluding negative and positive non-recurring items, EBITDA decreased by 10.6%, it said.

SFR booked mobile turnover of EUR7.52 billion in FY2012, down 11.1% on FY2011. In the fourth quarter of last year, SFR’s post-paid mobile customer base increased by 109,000 net new users it said, for a total of 16.563 million – stable when compared to 2011. The telco’s total mobile customer base reached 20.690 million at the same date, with SFR reporting that mobile internet usage continued to progress; 49% of SFR customers were equipped with a smartphone by end-2012 up from 41% at the end of 2011. Furthermore, SFR became the first French operator to open the 4G network to the consumer and business market, launching on 29 November 2012 in Montpellier and Paris-La Defense. Four additional cities will open in the first half 2013.

Broadband internet and fixed revenues totalled EUR3.96 billion in full-year 2012, a 0.9% decrease compared to 2011, and a 0.3% increase excluding the impact of regulated price cuts. SFR reported a total of 5.075 million broadband internet (residential) customers, with 56,000 net additions year-on-year. The customer base for SFR’s quadruple play offer (‘Multi-Pack de SFR’) reached 1.8 million at the end of 2012.

Yesterday, TeleGeography’s CommsUpdate reported that French privately owned cable operator Numericable is understood to be planning a cash offer for SFR. The article, which cited unidentified sources with knowledge of the situation, claimed that as talks between Numericable and Vivendi had stalled on a possible merger, the former was preparing a bid to buy out SFR entirely in a cash deal – with a view to merging the pair at a later date. Vivendi repeated its assertion that SFR is not for sale, and that it is assessing other options for the telco – including network sharing. However, since then Carlyle and Cinven have also been linked with a possible bid for the French carrier.

Meanwhile in Brazil, GVT’s revenues reached EUR1.72 billion in FY2012, an 18.7% increase compared to 2011; excluding the impact of tax changes (VAT), revenues increased by 35% at constant currency, its parent said. EBITDA was EUR740 million, a 23.1% increase compared to 2011 (+33.4% at constant currency) and EBITDA margin reached the record level of 43.1%, or 45.9% for the telecom activities only. Last year, GVT expanded its coverage to 20 additional cities and currently covers 139 cities. As a result of commercial efforts and geographical network expansion, GVT Telecom lines-in-service reached 8.669 million by 31 December 2012, a 37.0% increase year-on-year. After only one year in operation, its pay-TV service generated revenues of EUR83 million and had 406,000 subscribers, it added. GVT’s share of the net adds of the entire Brazilian pay-TV market reached 11.4%, and when considering only the cities where it operates, GVT’s share of net additions reached 27.7%. Full-year CAPEX was EUR947 million, up 34.3% y-o-y.

Brazil, France, Global Village Telecom (GVT), SFR