Vivendi sees profit growth in Brazilian TV

City A.M. Reporter
EUROPE’S biggest telecom and entertainment group, Vivendi, which owns Lady Gaga’s record label Universal Music Group, said it expects profits to grow slightly in 2011 despite economic and regulatory pressures as it reaps the benefit of emerging markets growth.

Vivendi yesterday reported 2010 results that were above forecasts, helped by growth at Brazilian telecom subsidiary GVT and video-games unit Activision Blizzard.

In 2011, GVT – which Vivendi bought in 2009 – should see revenue grow by 35 to 40 per cent as it accelerates geographical expansion, Vivendi chief executive Jean-Bernard Levy said.

“Growth should be in the mid-to-high thirties... GVT is in very good shape,” he said. GVT saw earnings before interest, tax and amortisation (Ebitda) jump to €108m (£91.4m) in the fourth quarter, from €20m a year earlier.

Music unit Universal, which has suffered from the structural decline of compact discs and other products, is expected to cut €100m in costs in 2011, Vivendi said.

Levy declined to comment on Vivendi’s planned purchase of the remaining 44 per cent stake in telecoms operator SFR that it does not already own from Britain’s Vodafone. Vivendi aims to own SFR as well as pay-TV unit Canal Plus, which is part-owned by Lagardere.

The SFR purchase would simplify Vivendi’s structure and help reduce the conglomerate discount on its share price.

The group has extra financial firepower since receiving $5.8bn from selling its stake in NBC-Universal.

Vivendi said it expected slight growth in 2011 earnings on a like-for-like basis and pledged to maintain a “high” dividend.