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March 15, 2013 11:58 am
Vivendi has suspended the possible sale of GVT, its fast-growing Brazilian fixed-line telecoms company, after bidders failed to meet an asking price of about €7bn, raising questions about its plan to refocus on its media assets.
The French media and telecoms conglomerate has embarked on a root and branch review of its asset holdings as it looks to cut its exposure to the capital-intensive telecoms business.
However a preliminary sales process for GVT, which drew interest from US broadcaster DirecTV and others, has been suspended because of a failure to attract high enough offers. Vivendi said it would not sell GVT for a “silly price”.
People close to the company stressed that a “strategic review” of its GVT holding remained under way, with other options under discussion. Bankers have said these could include a spin-off through an initial public offering, while other possible buyers could yet emerge.
The GVT bidding process has been hampered from the start by the fact that the two most natural buyers, Telecom Italia and Spain’s Telefónica, are severely cash-constrained because of the eurozone crisis.
Vivendi remains more optimistic about the sale of its controlling stake in Maroc Telecom, even though this has been held up by political concerns in Morocco. A number of companies have expressed interest such as Qatar’s Ooredoo and Etisalat of the United Arab Emirates.
The company has also spoken to Numericable, a French cable group, about a possible combination with SFR, its domestic telecoms business. But Jean-François Dubos, Vivendi’s chief executive, said last month that “SFR is not for sale”.
Vivendi wants to sell capital-intensive telecoms holdings to cut debt and regroup around its content assets, notably Universal Music – home to artists such as Justin Bieber, Rihanna, Nicki Minaj and Lana Del Rey.
SFR has suffered recently because of the launch of an ultra-low cost rival in France by Xavier Niel, the billionaire investor. SFR is now discussing a possible network sharing deal with either Bouygues Telecoms or France Telecom, its two big domestic rivals, as a way to cut costs to mitigate a sharp fall in mobile prices.
Vivendi’s share price has risen 23 per cent over the past year, but they fell 3.5 per cent in early Paris trading on Friday because of disappointment about GVT.
Some analysts have warned that bad news on disposals could lead to investor focus switching back to weak earnings momentum and the company’s limited credit rating headroom.
While GVT’s profits are growing rapidly, it is also in a phase of heavy capital investment.
However Vincent Bolloré, the French corporate raider who has acquired a 5 per cent stake in Vivendi, has indicated that he will be patient because the company’s attempt to reshape itself could take years.
The company said last month that its finances were strong enough to avoid “a fire sale”. Net debt at the end of 2012 was €13.4bn, below a targeted €14bn.
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