Bullish Vivendi beats forecasts

City A.M. Reporter
EUROPE’S largest entertainment and telecommunications group, Vivendi, posted forecast-beating third-quarter results yesterday, fuelled by strong sales at its video game and Brazilian telecom units.

But weaker results at its French telecom operator SFR, which is a key driver of Vivendi’s revenue and profit, showed how competition is intensifying in France, forcing SFR to spend more to recruit and retain clients and putting pressure on margins.

The company also confirmed its 2010 objectives of an increase in earnings before interest, taxes and amortiSation (EBITA) and higher adjusted net income than in 2009, when it reached €2.59bn (£2.2bn).

Vivendi, which competes with France Telecom in telecommunications and Electronic Arts in video games, said quarterly EBITA was €1.43bn, ahead of the €1.40bn average in a Reuters poll of 11 analysts.

Third-quarter revenue was €6.89bn, compared with the average estimate of €6.70bn in the poll.

Vivendi’s Brazilian telecom unit, GVT, which it acquired a year ago, raised its forecast for 2010, saying revenue would rise 40 per cent and adjusted earnings before interest, taxes, depreciation and amortisation, or EBITDA, would rise 50 per cent. GVT is investing heavily in the coming years to expand its network in economically booming San Paolo and Rio de Janeiro.

GVT had previously expected revenue to be up 34 per cent and EBITDA 44 per cent for the year.

French telecom operator SFR, 56 per cent owned by Vivendi and the rest by Vodafone Group, posted higher revenue; but its operating profit came in lower than analysts had expected.