Vivendi’s SFR spinoff & company restructure announcement fails to inspire shareholders.

Sep 13, 2013
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In the past weeks the European Telco industry hasn’t been short of big news. After Vodafone Group Plc. agreed to sell its U.S. wireless business, and Microsoft Corp acquired Nokia’s Devices and Services division, the long-expected overhaul of Vivendi’s structure has taken a further step towards a more competitive group.

Vivendi will divest in SFR and will use the proceedings from their previous sale of gaming division Activision Blizzard and Maroc Telecom to repay its current debt. The stock markets reacted with little enthusiasm with little more than 2,45% increase since the announcement to the moment of writing, and it is yet to be seen if SFR will be able to compete head to head with Orange and Bouygues.

With the spinoff announcement Vivendi has also named Vincent Bolloré vice-chairman of its board. The well-known French businessman made news with the reported rising tensions between him and the powerful chairman Jean-Rene Fourtou over the naming of the new CEO for the group. After fearing that Bolloré was against the spinoff of SFR investors were relieved to know that Bolloré is now the official number two on the board, which makes him next in line after Fourtou leaves the company, that and the fact that Bolloré has come to an agreement with Fourtou about the new CEO which led him to remove his own name as a candidate for the job.

As the largest shareholder in Vivendi, Bolloré has a strong incentive to keep an overarching arm over the company’s doings. Being one of France’s richest man, and one the world’s biggest fortune, it is easy to understand why he wants more control over the company, as such, Bolloré was not happy with the initial choice of the head-hunters pick: a German media executive.

The depressed stock of Vivendi has for long been signaling the need for a major overhaul to the company’s organization. It started with selling off its stake in Activision and SFR seemed like the next unit to go, as we covered back in July. As network access becomes commodity content takes center stage in the competitive landscape. For some time now this trend has been building up, and as Apple ramps up its efforts to enter the living room, alongside with Microsoft’s imminent launch of the new Xbox One, the content battle is about to get even more intense in the following months.

Can we expect Vivendi to be able to compete in this new arena as it becomes leaner? Being the spinoff decision pushed from the shareholder side it remains to be seen how will senior management take this opportunity to redefine the company in truly new international media group.