Games sales offset music falls at Vivendi

Increasing sales of digital games such as World of Warcraft and Call of Duty helped Vivendi offset lower earnings at its Universal music business and its French and Moroccan mobile operators in the six months to June.

The media and telecommunications group, which recently completed a long-running restructuring, was also helped by strong sales of broadband and voice services at GVT, its Brazilian unit.

That was in contrast to SFR, its domestic French telecoms operator, where earnings before interest, taxation and amortisation fell 8 per cent to €1.94bn ($2.8bn), largely because of increased price competition and a VAT increase.

In Morocco, earnings at Vivendi’s Maroc Telecoms fell 11 per cent because of a slight decline in sales, though profit margins remained high.

Earlier this year Vivendi spent €8bn buying Vodafone’s 44 per cent stake in SFR, a price some analysts said was more expensive than the level at which telecoms peers were trading. But Jean-Bernard Lévy, Vivendi’s chief executive, insisted on Wednesday that the purchase “achieved an essential strategic objective on very favourable financial terms”.

He added that “we now have full control of all our assets and have simplified our organisation”.

SFR, along with peers France Telecom and Bouygues Telecom, is facing even tougher competition in its home market, with the imminent arrival of Iliad’s Free Telecom as a fourth mobile rival.

Universal, whose roster includes Lady Gaga, Jennifer Lopez and Rihanna, suffered a 2 per cent fall in sales to €1.86bn and a 17 per cent drop in ebita to €132m. Like industry peers, it has been struggling with internet downloading but reported a 13.5 per cent increased in digital music sales. Mr Lévy said he would look into buying parts of EMI, Universal’s struggling rival.

Vivendi was lifted by a strong performance at Activision Blizzard, its games company. Ebita rose 34 per cent to €833m, driven by record sales of online franchises such as World of Warcraft. The company is planning new Call of Duty releases later this year, both for games consoles and online. It said pre-orders for Modern Warfare 3, whose launch was expected in November, have “significantly exceeded” pre-orders for its predecessor Black Ops.

GVT, the Brazilian telecoms operator bought by Vivendi in 2009, also performed well, with earnings rising 91 per cent to €187m.

Overall, Vivendi sales rose 2 per cent during the period to €14.25bn, while ebita rose 3.7 per cent. Adjusted net income rose 20 per cent to €1.83bn, though this was inflated by a tax impact from the SFR purchase.

Mr Lévy remained confident about the rest of the year “despite the turbulent economic and financial environment”.

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