Vivendi Drafts SFR Cost Cuts, Looks to New Unit CEO for ‘Vision’

Vivendi SA (VIV)’s Chief Executive Officer Jean-Bernard Levy said “strategic vision” for French phone unit SFR will come from Michel Combes, the division’s new head starting Aug. 1 and a current Vodafone Group Plc (VOD) executive.

The company has drafted cost-cutting plans for the unit and will give details to unions in the coming weeks, Levy, Vivendi’s head and interim CEO of SFR, said today in a speech to reporters.

“Michel Combes will lead the company from Aug. 1 with his own strategic vision, within the boundaries that Vivendi will set as a shareholder,” Levy said.

Levy spent 7.95 billion euros ($9.84 billion) to take full control of SFR from Vodafone last year. Vivendi’s shares, which closed up 0.7 percent today at 13.06 euros, have dropped 34 percent since the deal was announced.

Faced with new competition from discounter Iliad SA (ILD), which became France’s fourth mobile-network operator on Jan. 10, SFR has cut prices and looked to reduce expenses. Its chief for more than 11 years, Frank Esser, stepped down two months ago. Levy has been running the unit since.

“A great deal of our effort has been to organize a commercial response,” Levy said. “We’ve started a plan to transform the company, and we are putting the last touches to it.”

SFR, which accounts for 41 percent of Paris-based Vivendi’s sales and 34 percent of operating income, has looked to cut costs by stopping unpopular product lines as well as reducing network, computer and call-center expenses.

Vivendi plans to reduce the unit’s operating expenses by as much as 450 million euros this year through firings, cuts in marketing spending and renegotiating contracts with call centers, two people with knowledge of the matter said earlier this month.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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