Vivendi is negotiating the sale of tele SFR with pay TV Group

Vivendi holds negotiations on a merger, valued at several billion euros, between its telecommunications company SFR and Numericable, pay-TV operator. The deal would combine the second-largest cell phone carrier of France with one of the largest groups of cable TV in the country.
Negotiations between the owners of the Numericable and Vivendi, the French media group, and the telecommunications conglomerate that is involved in a deep restructuring of their various companies, began in recent weeks, said sources familiar with the discussions.
These sources stressed that the negotiation is still in an early stage and would be only one of several options considered by Vivendi. Some analysts estimate that the SFR is worth approximately € 15 billion and Numericable, which is owned by private equity groups, Cinven and Altice, Carlyle is valued between € 4 billion and € 5 billion.
The proposal under discussion involves the merger of the two companies to form a new company, with Vivendi holds 49% of the shares and the owners of the Numericable with 51%.
Because the SFR is worth much more than the Numericable, sources close to the negotiations said that any deal would involve the payment of an amount of money, estimated to be at least € 4 billion.
Vivendi, Numericable, Carlyle, Cinven and Altice refused to comment.
Vivendi will examine the proposal in early stage reflects its desire to raise cash and reduce its exposure to the telecommunications business, which requires intensive use of capital.
The Group embarked on its strategic review "without taboos" in April 2012, after a price war in France's telecommunications sector damage profits of SFR and lead to a sharp fall in its shares.
Disagreements over the strategic shift led to the departure in June, Jean-Bernard Lévy, the former Executive Director who was closely linked to the area of telecommunications.
Vivendi also involved banks to examine a possible sale of the GVT, the Brazilian fixed-line company, and a controlling stake in Maroc Telecom, which owns largest operator of telecommunications of Morocco.
Vivendi's directors said that the sale of the assets would be used to pay € 14 billion of its net debt. They also stated that the GVT has contributed at least $ 2.5 billion in earnings before interest, taxes and amortization this year and, therefore, they "have no hurry" to sell it.
People close to the company said that Vivendi would take "weeks or months" before making an announcement on their new structure. Jean-Rene Fourtou, who took over the Presidency of the Board of directors after the departure of Jean-Bernard Lévy, is favorable to the media area.
Vivendi owns Universal Music, Canal Plus, a French pay-TV operator, and Activision Blizzard, game developer. The Group considered the sale of Activision, though buyers have postponed trading due to the high price.
The deal with the private equity group to the SFR was published by the "Financial Times" last week. Vodafone has also been indicated as a possible buyer.
Morgan Stanley and J.P. Morgan are advising the Numericable, while the BNP Pariba's and Goldman Sachs help Vivendi in the negotiation.