Vivendi SA prepares a spinoff of its SFR unit

Vivendi SA, which conducts operations ranging from music, games and television to film and telecommunications is currently preparing a spinoff of its French phone business SFR, people with knowledge of the matter who asked not to be named, reported.

The company is also said to be considering a possible sale of the unit in question to Altice, its biggest investor, and to Numericable Group SA, which provides cable broadband services. Still, there is no formal offer made, but the main goal of the company is to finalize the spinoff and list for SFR.

People, who asked not to be identified, because the talks are not yet public, shared that Vivendi SA and Numericable Group have been negotiating over the past year, but they have not managed to agree on valuation. On the other hand, Altice and its Chairman Mr. Patrick Drahi are currently trying to consolidate telecommunications assets located in Europe.

SFR is the second-largest wireless carrier in France, with a 2012 revenue estimated at 11.3 billion Euro (15.3 billion dollars). Such a sale would help Vivendi SA accelerate its reorganization around media, music and broadcasting assets. The people familiar with these issues revealed that the company is aiming to file details on the potential spinoff plan to market regulators by March 2014, and shareholders will be asked to approve a split of the company in June 2014.

One of the analysts working for Liberium Capital Ltd said in a note, cited by Bloomberg: “A positive for Vivendi recruiting story. This will raise hope that Vivendi will be rid of SFR.”

Representatives and spokespeople of Vivendi SA, Numericable Group SA and Altice refused to make any comments on a possible deal between the communications groups.

The Initial Public Offering of Numericable Group SA was held in Paris in November 2013, and Altice is currently working on its own IPO. The latter has revealed that it is looking at different options and companies, which are able to support its positions and help the company expand into new regions.

In November 2013, the supervisory board of Vivendi SA approved the planned spinoff of SFR and chose Arnaud de Puyfontaine from Hearst Magazines International to head the remaining media assets of the company – Canal+, Universal Music Group and Brazilian broadband provider GVT. The strategy of the company also included selling the stakes in video-game developer Activision Blizzard Inc. and Maroc Telecom SA. The deals were estimated to about 14 billion dollars.

Vivendi SA rose to EUR 19.60 by 10:33 GMT, up 0.15% on the day, and its one-year return rate is up 24.30%.