Earnings before interest, taxes, depreciation and amortization at French mobile-phone division SFR will be 2.8 billion euros ($3.7 billion) this year, less than the 2.9 billion euros predicted earlier, Paris-based Vivendi said today in a statement. The company cuts its forecast for earnings from pay-TV provider Canal Plus to 650 million euros from 670 million euros.
Vivendi, trying to refocus its business on media and content, last month announced the $8.2 billion sale of a stake in video-games maker Activision Blizzard Inc. (ATVI) Chairman Jean-Rene Fourtou, having promised to overhaul the company and weighing a split-up of its businesses, is also in exclusive talks to sell its stake in Maroc Telecom SA to Emirates Telecommunications Corp.
“We deem these results disappointing,” Chief Financial Officer Philippe Capron said during an earnings call. “We’ve taken Activision and Maroc Telecom out of the accounting, but they had better performances than the four divisions we are keeping -- that’s weighed on our earnings.”
Vivendi’s total second-quarter sales dropped 0.5 percent to 5.43 billion euros, while net income rose 7.5 percent to 501 million euros. SFR reported an 11 percent drop in quarterly sales, to 2.5 billion euros, while its Ebitda fell 16 percent to 768 million euros.
As a price war started by Iliad SA (ILD) goes on for a second year, SFR has started talks with Bouygues SA’s phone unit over sharing part of their mobile-phone networks to cover more ground for less. Shrinking phone bills have also prompted SFR to simplify its structure and cut jobs.
SFR is cutting costs faster than planned and is on the right track to turn around its business next year, Capron said today. He predicts full-year results will show cost savings taking hold at SFR as well as an improvement in winning over new clients.
The shares rose 0.7 percent to 15.45 euros at 9:20 a.m. in Paris, bringing this year’s decline to 9 percent. That values the company at 20.7 billion euros.
Vivendi, which is looking to cut back its debt and rebuild the company around Universal Music Group and Canal Plus, has said an IPO is an option for SFR, though business at the unit must first be strengthened.
“We’re not ready to discuss this option yet,” Capron said when asked about an IPO of SFR. “Everything that goes in the direction of a turnaround at SFR gives us more courses of action to go ahead with transforming Vivendi.”
Vivendi has also said it may resume a process to dispose of its Brazilian broadband unit GVT.
Taking into account expected asset disposals including Maroc Telecom and Activision Blizzard, Vivendi’s net debt will drop to 6.5 billion euros from 17.4 billion euros as of June 30, the company said today.
To contact the reporter on this story: Marie Mawad in Paris at email@example.com