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Vodafone Sells SFR Stake for $11B

Continuing with its plans to divest minority holdings, Vodafone Group plc (NYSE: VOD) has sold its 44 percent stake in French operator SFR to Vivendi , which already owns the other 56 percent.

Vivendi is paying €7.75 billion (US$11 billion) for the stake. The deal is expected to be completed during the second quarter of this year, at which time Vivendi will pay Vodafone a further €200 million ($284.4 million) dividend. The two companies will continue to work together as partners, having extended their commercial cooperation agreement for a further three years.

The price is higher than some had expected: Reports from just a few weeks ago suggested that Vivendi had reportedly balked at paying more than $9.6 billion for the SFR stake, but Vodafone always looked set to hold out for a price that would meet its stated asset investment strategy. (See Euronews: March 14 and Vodafone Updates Strategy, Profit Outlook.)

The move gives Vivendi total ownership of one of Europe's leading integrated communications service providers, second in its home market only to Orange (NYSE: FTE). At the end of 2010 SFR had 21.3 million mobile customers (33.1 percent market share) and 4.9 million fixed broadband customers (24.3 percent share). The operator, which secured a strong position in the French fixed and enterprise services market with the acquisition of Neuf Cegetel in 2008, reported revenues of €12.6 billion ($17.9 billion) and cash flow (operating income) of almost €2 billion ($2.84 billion) in 2010. (See SFR to Swallow Neuf in $6.4B Deal.)

Vodafone says it will use €4.5 billion ($6.4 billion) of the proceeds to return cash to its investors. That news and the slightly higher-than-expected sale price gave Vodafone's share price a 1.95 percent boost to 182.6 pence on the London Stock Exchange.

Vivendi's stock is up just 0.4 percent on the Paris stock exchange to €20.60.



News of the deal comes only days after Vodafone announced it will spend $5 billion increasing its majority stake in Indian mobile operator Vodafone India . (See Vodafone, NTT Boost India Investments.)

Vodafone's decision to sell to Vivendi ends a tussle for ownership of SFR that dates back to 2002, when Vivendi was recovering from financial difficulties and Vodafone fancied a controlling interest in SFR. (See Vodafone Loses SFR Battle and All Eyes on France.) But in recent times Vivendi has been more keen on taking total control and it always looked like a deal would be done as soon as the French media and communications conglomerate met Vodafone's financial demands. (See Will Vodafone Bid SFR Adieu?.)

— Ray Le Maistre, International Managing Editor, Light Reading

digits 12/5/2012 | 5:08:47 PM
re: Vodafone Sells SFR Stake for $11B

Vodafone in the past few days = invest in India, retreat from France. 


Market growth potential + majority ownership trumps m,ature market with higher ARPU! 

comtech3 12/5/2012 | 5:08:44 PM
re: Vodafone Sells SFR Stake for $11B

But, on the other hand, VZW  may be caught between a "rock and a hard place".Reason being they would want that cash that they would use to purchase the 44% in Voda to use for their expansion/ system upgrade to stave off the competition should the AT&T deal with T-mobil materialize.Voda does not have to do a thing,but watch the cash register chime.Their exit strategy is to listen for the regularity of that chiming,and the more it chimes, the longer they sit and wait.When the becomes irregular, it time to leave VZW in bankrupcy.I am can humbly say, not in our life time will we see that!

digits 12/5/2012 | 5:08:44 PM
re: Vodafone Sells SFR Stake for $11B

MY view is that Vodafone would sell its stake to Verizon if Verizon offered a high enough price, but I'm not sure it's prepared to. 


Vodafone doesn't need to sell that stake so it's not under any pressure, though there is no way it can own a majority holding and take strategic control.


So I think it will sit tight and wait for a bumper offer. It's clear that Colao is a clear thinker and good bargainer. And VZON might be tempted into a bumper offer if it looks like the AT&T/T-Mobile USA deal might actually go through, so we may see a tempting offer within the next 12 months. Of course VZON will start low - I would expect it to have to pay about 15% more than it originally offers if it wants a 'Yes' from VOD. 


In the meantime there are hints that a dividend from Verizon Wireless might be in the offing, though some wheeling and dealing might be needed to get that payment. 

comtech3 12/5/2012 | 5:08:44 PM
re: Vodafone Sells SFR Stake for $11B

What say you about the partnership Voda has with Verizon here in the US? Voda has not been paid a dime for years from VZW and the relationship is getting sour.It was once echoed through the grapevine that VZW  wanted to purchase the 44% stake that Voda has in Verizon Wireless,but Voda won't let go.There's so much at stake, monetarily, in this union than neither wants to let go.Meanwhile Voda was more than willing to jump ship in France because there are less fish to be caught in that sea.

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