Vivendi in no rush to divest as profit slides

City A.M. Reporter
VIVENDI reported a slide in first-half operating profit yesterday, hurt by tough competition at its French mobile phone business SFR, and announced a plan to reduce the unit’s operating costs by €500m (£396.1m) a year by the end of 2014.

Vivendi also said it was in no rush to act on a portfolio review to weigh sales of video games maker Activision Blizzard and Brazilian telco GVT or an outright dismantling of the group.

Vivendi’s former chief executive left two months ago after a clash with the board over how to reduce a deep share slump.

The cost cuts will come from a voluntary redundancy plan as well as “variable” cost savings all over the business including procurement costs and information technology, finance chief Philippe Capron said yesterday.

“We are suffering from the price reset in the French mobile market,” he said. “We have to adapt to the new reality.”

SFR managed to slow mobile client losses to 53,000 in the second quarter amid a price war touched off by the arrival in January of Iliad’s Free Mobile service, which offers lower prices and simpler tariffs with two offers at €19.99 per month.

First-half sales at SFR, which generates most of Vivendi’s cash, fell 5.9 per cent to €5.76bn, while earnings before interest, tax, depreciation, and amortisation (Ebitda) fell five per cent to €1.85bn. The conglomerate saw overall first half revenues slip 1.2 per cent to €14.1bn, while Ebita fell 12.7 per cent to €2.9bn.

Vivendi confirmed its annual profit target this year as well as SFR’s guidance for a 12-25 per cent decline in Ebitda.