Vivendi Bids to Join Africa's Mobile Phone Boom

Posted by: Carol Matlack on July 09

Paris-based Vivendi, best known as the owner of Universal Music and Activision Blizzard video games, is setting its sights on a new destination: the fast-growing cellular phone business in sub-Saharan Africa.

Vivendi on July 9 confirmed it was in talks to acquire the mobile phone business of Kuwaiti group Zain, which has some 40 million African subscribers. If successful, the deal would make Vivendi one of the biggest cellular companies in Africa.

Vivendi’s chief mobile phone business now is in France, where its SFR unit is No. 2 behind France Telecom’s Orange. It also is majority owner of Moroccan phone group Maroc Telecom, which has 14.6 million mobile subscribers. To reduce its dependence on slow-growing France, Vivendi has been scouting for opportunities in emerging economies.

Africa certainly fits the bill. It has become one of the fastest-growing markets on the planet for mobile operators such as Britain’s Vodafone, one of the most aggressive investors in the region.

A deal with Zain would give Vivendi a big piece of the action. Zain has some 17.2 million subscribers in Nigeria, 5.2 million in Sudan, and a total 15 million in Tanzania, the Democratic Republic of Congo, Kenya, Zambia, and Uganda. That would place Vivendi roughly even with one of the region’s biggest players: Vodacom, a South African company 65% owned by Vodafone. Africa’s biggest mobile phone outfit, South Africa-based MTN group, has some 80 million subscribers.

In announcing its talks with Zain, Vivendi stressed there was “no certainty” that it would reach an agreement. The French business daily Les Echos reported that Zain, which bought pan-African operator Celtel in 2005 for $3.4 billion, is now asking as much as $12 billion for the business, and that Vivendi was balking at that figure.

But if Vivendi gets its way, it will soon be selling not only music and video games, but also phone service in remote African villages. That's what you call a truly diversified global company.