Vivendi Universal has said it wants to buy BT and SBC’s stakes in telecoms firm Cegetel.
UK telco BT and US cable operator SBC both plan to sell their shares in French telco Cegetel, which controls mobile operator SFR. Media group Vivendi Universal, which owns 44% of Cegetel, has said that it will buy these stakes, which amount to 26% for BT and 15% for SBC.
The news that Vivendi is interested looks like a blow to Vodafone, which owns 12% of SFR through its Cegetel stake and 20% directly. The world’s largest mobile operator was widely rumored as the likeliest buyer, since the stakes would have given it effective control of SFR. But a pact between Vodafone and Vivendi means Vodafone cannot outbid the French firm.
It also looks like a surprising decision by Vivendi. Fixed-line telecoms do not show many synergies with the media business, especially given that Cegetel has little international coverage and isn’t strongly Internet-focused. And a fight with Vodafone would cast doubt on their joint venture Vizzavi mPortal.
But actually, the deal would make sense for all concerned. Vodafone has little interest in running fixed line networks. Given that the UK operator is reportedly trying to raise extra finance for use in France, it looks likely that Vivendi will sell Vodafone a larger stake in SFR as part of the Cegetel acquisition. Many expect Vivendi eventually to sell the mobile operator to Vodafone.
There are good financial reasons for Vivendi to wait. One is simply the current low valuation of telecoms shares. Unlike BT, Vivendi doesn’t need the money urgently; it can afford to hang on until prices improve. It also has an incentive to gain control of Cegetel before selling out – the price per share it would obtain for a majority holding would be higher than the price for a large minority stake.
So despite the apparent machinations and intrigues, the Vodafone/Vivendi alliance still seems to be on track. And by the time mobile Internet growth has made Vizzavi a major player, SFR may well be part of the Vodafone empire.
