Vivendi seen posting higher operating profit

By IBTimes Staff Reporter | February 26 2010 10:38 AM

Vivendi is expected to post higher revenues and operating profit for 2009 than a year earlier, even as its music division struggles and its telecommunications units face more intense competition.

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Twelve analysts polled by Reuters predict that Europe's largest entertainment group will report 5.25 billion euros ($7.13 billion) in earnings, before interest, tax, and amortisation and 26.97 billion in revenues.

The results cap off an eventful year for Vivendi during which it arranged to sell its stake in NBC Universal to General Electric for $5.8 billion, bought Brazilian fixed operator GVT for 2.8 billion euros, and lost a U.S. class action lawsuit for misleading shareholders during between 2000-2002.

Investors will be looking for signs of how the group's M&A strategy will evolve in light of the GVT and NBCU deals.

Vivendi CEO Jean-Bernard Levy has long said he wants to expand the group's footprint in telecom in high-growth emerging markets. But Vivendi missed out buying Zain's African operations, which are now being scooped up by India's Bharti, after months of negotiations fell apart last summer.

Levy's M&A ambitions may also be hampered by uncertainty over how much Vivendi will have to pay in damages to settle a U.S. class-action lawsuit, as well as its pledge not to do deals that would threaten its credit rating.

Vivendi owns Universal Music Group, the world's biggest record company, and controls Morocco's dominant telecom operator Maroc Telecom and SFR, France's second largest mobile operator.

It also owns 56 percent of Activision Blizzard the world's top video games company and publisher of the popular Guitar Hero and Call of Duty franchises and has a 65 percent stake in pay-TV group Canal Plus France.

Activision Blizzard and Maroc Telecom have already reported their earnings, so focus on Monday will be on the performance of SFR and the music division.