French media and telecom group Vivendi S.A. (VIVEF,VIV.L) is considering a spinoff its biggest unit French wireless carrier SFR so as to focus on its faster-growing media business, Bloomberg reported Wednesday citing people familiar with the company's deliberations.
Discussions about exploring a spin off of SFR follow failed attempts by Vivendi to get acceptable bids for its other units - video game maker Activision Blizzard Inc. (ATVI: Quote) as well as Brazilian phone and Internet unit GVT, after Vivendi's board decided last year to sell off assets instead of splitting the Paris-based company into two.
According to media reports last week, satellite television company DirecTV Inc. (DTV) pulled out for the bidding for GVT. The company was seen as one of the prime bidder for the unit. Vivendi has now reportedly put the sale of GVT on hold due to lower than expected bids.
DirecTV's reported move marks a major setback for Vivendi, which has been looking to scale back its presence in telecommunications and instead, increase focus on its media and content businesses. The company had hoped to close a sale of the unit before its annual shareholder meeting in April.
Meanwhile, Vivendi is said to be continuing with its efforts to sell another telecom asset, African phone operator Maroc Telecom. The company is also the owner of Universal Music Group.
SFR made up 40 percent of Vivendi's 2012 revenue. SFR's revenue declined 7 percent in the year to 11.29 billion euros, due to the progressive impact of price cuts related to competition and to price cuts imposed by the regulators. The entry of discounter Iliad SA (ILD) into the French wireless market has triggered a price war.
According to the Bloomberg report, talks on a separation of SFR gained momentum following Vivendi's board meeting in February. A proposal under consideration includes SFR retaining most of Vivendi's debt, which Vivendi is seeking to reduce as if focuses on expanding in media.
SFR, France's second-largest mobile operator, may be valued at about 15 billion euros, Bloomberg reported. Vivendi spent 7.95 billion euros in 2011 to acquire a 44 percent stake in SFR from Vodafone Group Plc (VOD: Quote).
In the past, Vivendi has reportedly held talks with cable operator Numericable about a merger with SFR, but they turned out to be unsuccessful. Vivendi is expected to provide an update on its strategy at its annual shareholders meeting on April 30.
VIVHY closed Wednesday's trading at $20.91, up $0.82 or 4.08 percent on a volume of 24,652 shares.
by RTT Staff Writer
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