Bloomberg News

Vivendi’s French Phone Unit Is Ready for IPO, SFR Chairman Says

June 11, 2013

SFR Chairman Stephane Roussel

SFR Chairman Stephane Roussel said, “We are ready for an IPO.” Photographer: Balint Porneczi/Bloomberg

Vivendi SA’s (VIV) French phone unit SFR is ready for an initial public offering, SFR Chairman Stephane Roussel said, though it will be up to its parent to decide on the timing.

Vivendi is seeking to make SFR more autonomous as the Paris-based company pushes to refocus its business on media and away from telecommunications, Roussel said yesterday at a conference organized by French daily newspaper Les Echos.

“We are ready for an IPO,” Roussel said. “It will be for Vivendi to decide, but I do think we have an equity story to tell. Given our structure and forecasts, we can do an IPO.”

Vivendi last month moved its telecommunications chief Jean-Yves Charlier to the chief executive officer role at SFR, splitting the CEO and chairman positions and bolstering leadership at the unit. SFR, France’s second-largest mobile-phone company, will seek more people to expand its board, Roussel said yesterday.

More than a year after Vivendi Chairman Jean-Rene Fourtou promised a “no-taboo” strategy review of the company’s conglomerate structure, investors are waiting for proof that management is committed to follow it through. Vivendi has said an IPO is an option for SFR, though not in the near term. Business at the unit must first be strengthened, Philippe Capron, Vivendi’s finance chief, said in April.

Price Wars

SFR won’t improve its profitability this year or next as price wars in the wireless-services market continue in France, Roussel said yesterday. Competition has intensified since Iliad SA (ILD) became the country’s fourth mobile carrier last year and started selling discounted phone packages starting at 2 euros per month.

SFR will continue to trim costs, Roussel said. Falling French phone bills have prompted SFR to simplify its structure and cut jobs. The unit has forecast it will lower its expenses by 500 million euros ($665 million) by the end of 2014.

“We will seek savings beyond what we have already announced,” Roussel said. “It won’t be on jobs or investments. It will be, for example, by simplifying our commercial offers.”

SFR is open to sharing parts of its network and partnering with rivals, except through mergers, Roussel said.

Vivendi owns all of SFR since it bought Vodafone Group Plc (VOD)’s 44 percent share for 8 billion euros in 2011.

Different Rhythms

“It makes sense for SFR to be an autonomous company, managing its own investments and returns,” Roussel said. “Vivendi wants to make SFR more autonomous because telecommunications and content don’t have the same rhythms.”

Vivendi also owns phone companies in Morocco and Brazil and has sought to sell those assets as it looks to focus instead on content businesses: music company Universal Music Group, video-game publisher Activision Blizzard Inc. and French pay-television company Canal Plus.

Emirates Telecommunications Corp. and QSC Qatar Telecom in April submitted binding offers for Vivendi’s 53 percent share of Maroc Telecom, Morocco’s biggest phone company. A deal is targeted for completion by October, people familiar with the matter have said.

Attempts to divest Brazilian Internet operator GVT and a stake in Activision Blizzard have failed because of valuation differences or insufficient interest.

Vivendi shares dropped 13 percent in Paris trading this year to close at 14.71 euros yesterday.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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