For many European telecommunications watchdogs — and even a few casual observers — the news last week of talks that indicated multinational Vivendi may sell French mobile provider SFR to cable group Altice landed as somewhat of a surprise.
But really, it shouldn’t have. While news of a possible deal came sooner than many thought, Vivendi’s decision to divest from SFR has been a priority since late 2013. In November, Vivendi reported that it was starting the process of de-merging SFR from its various properties, a move they hope to have approved at the shareholders meeting in June.
Sensing SFR on the chopping block, Altice sprang to action. The cable conglomerate has long had its eye on SFR, failing in a bid to buy the company in 2012 but increasing its investment possibility with two initial public offerings (for Altice and subsidiary Numericable) in the interim.
Two other French telecom players, Bouygues Telecom and Iliad, expressed interest following the Numericable talks going public, further evidence of sector interest in the de-merger.
More than anything, though, talk of an accelerated deal, whoever ultimately is on the receiving end, is just the latest indication of Vivendi’s sharpened focus on its moneymakers, companies like French premium cable company Canal Plus and the music industry-leading Universal Music Group. Vivendi’s other property, Brazilian company GVT, is ostensibly a telecommunications group but has recently diversified its revenue sources with a foray into pay television. GVT, as an expanding company in a rising economy like Brazil, is another feather in Vivendi’s cap.
With only SFR and Brazilian telecom group GVT left on its telecommunications books, Vivendi — once Europe’s leading telecommunications group — is on the verge of becoming simply a new media, content and entertainment group.
This has been a calculated effort, with Vivendi aiming to reduce debt by dealing successful but capital-heavy companies like African company Maroc Telecom and video-game giant Activision Blizzard over the final quarter of 2013.
That quarter also saw the promotion of a new chairman, the industrialist Vincent Bolloré, who is famous for his ability to turn flagging companies around. And by the end of 2013, that’s precisely what Vivendi had become. Despite Universal Music’s exponential growth and the steady rise of Canal Plus as a global television player, Vivendi saw overall income slashed with heavy losses coming from the telecommunications sector. With that in mind, it was only natural for the company to side with its cash cows.
Universal Music Group is the world’s largest music company whose library includes almost every known international star from Avicii to Rihanna to Kanye West. (To give an idea of Universal’s scale, their collection also includes The Beatles’ entire catalog.) Vivendi showed its commitment to Universal this past July, when the Paris-based company rejected Japanese company Softbank’s offer to buy Universal. Softbank reportedly offered $8.5 billion for the property, which was significantly higher than many analysts considered Universal Music to be worth.
Canal Plus has similarly blossomed with a new channel, Canal+Series, and a foray into YouTube channels. It has collaborated on a series of successful shows, among them Borgia and The Returned (French: Les Revenants), which have transcended the French and even European markets. Both shows won critical acclaim when they appeared on U.S. television, through Netflix and the Sundance Channel, respectively.With the television group, Vivendi has similarly retrenched. In October, the conglomerate paid roughly a billion dollars to buy out Lagardere Entertainment’s minority stake in the company. If nothing else, the move further confirms Vivendi’s plans to throw its considerable weight behind a handful of companies.