SFR Spinoff From Vivendi Is Only Plan for Carrier, CEO Says

A spinoff of French phone company SFR from owner Vivendi SA (VIV) is the only plan for the unit, its chief executive officer said, dismissing an alternative merger involving the country’s second-largest carrier.

The planned separation of SFR with 2012 revenue of 11.3 billion euros ($15.3 billion) is “well advanced,” and will lead to a stock listing on July 1, SFR Chairman and CEO Jean-Yves Charlier told reporters in Paris today.

“We have one plan, and only one -- it’s splitting SFR from Vivendi,” Charlier said. “We’re not at all operating a dual-track scenario. There’s only a single track.”

While Vivendi and cable operator Numericable SAS (NUM) have held talks on and off in the past year about a merger without being able to agree on valuation, Altice SA, Numericable’s biggest investor, is making a renewed push to consolidate telecommunications assets in Europe, people familiar with the matter said last month.

Altice raised 1.3 billion euros in an initial public offering last week, giving the company founded by entrepreneur Patrick Drahi a vehicle for raising capital for possible deals. While the IPO is subject a so-called share lockup for 180 days, an exception allows Altice to issue new shares starting 45 days after the IPO if the proceeds are used to finance a merger or acquisition, according to regulatory filings.

Listing Vehicle

Altice, which debuted in Amsterdam last week, rose for a second day, adding 1.2 percent to 28.92 euros at 12:39 p.m. local time and valuing the company at 6 billion euros. Vivendi, which relied on SFR for almost 40 percent of its 2012 revenue, slipped 1.1 percent to 19.72 euros in Paris trading. Numericable lost less than 1 percent to 27.96 euros.

Vivendi, which will ask shareholders in June to approve a split of the Paris-based company into two, is aiming to file details of SFR’s spinoff plan to market regulators by March, people familiar with the matter have said.

The separation is part of Vivendi’s reorganization around media, music and broadcasting assets. SFR is valued at 12 billion euros, according to analysts at Liberum Capital Ltd.

SFR and smaller rival Bouygues SA (EN) agreed last week to share part of their mobile-phone networks, allowing each other to cover more ground for less money. Charlier today called analyst estimates of 200 million euros in annual savings for SFR from the pact “realistic.” The savings will fully kick in from 2018, he said.

The network-sharing agreement is part of plans by SFR to reduce spending to preserve cash as it fights price wars and declining phone bills. Differentiating from rivals’ fixed-line and wireless offers will also be key, Charlier said.

“We have an ambitious plan to re-position SFR, focused on cash flow and differentiating products,” he said. “It will be up to investors to decide if this, as well as the French telecoms industry eventually being reshuffled, makes for an attractive equity story.”

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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