PARIS // Europe's largest entertainment group Vivendi delivered forecast-beating second quarter underlying profit, despite the global economic crisis, and said it had ditched a deal with Kuwaiti telecoms firm Zain. Chief executive Jean-Bernard Levy said on Tuesday the French company was sticking to a cautious acquisition policy, which would sharply reduce its debt in 2009. Mr Levy made the comments after Walt Disney on Monday agreed to buy Marvel Entertainment for US$4 billion in the year's biggest media deal.
Vivendi said it still expected a strong rise in adjusted operating income for 2009 and confirmed a dividend payout ratio of at least 50 per cent of net adjusted income. "We are confident in our ability to drive long-term profit growth and reiterate our commitment to distribute high dividend streams for 2009 and beyond," Mr Levy told a call with analysts. Vivendi shares were up 1.5 per cent at 20.18 euros by 0833 GMT, bucking a negative European media index.
"Given Vivendi's recent strong underperformance, we believe it's time to massively reposition ourselves on the stock, whose risk profile seems very limited," broker Oddo Securities said. Vivendi shares have lost 14 per cent so far this year, lagging both the European telecoms and media sectors. Vivendi, which in July ended talks to buy a majority stake in Zain's African telecoms unit, said the issue was now "over".
Mr Levy told journalists Vivendi remained "very cautious on external growth" and that net debt could decline to slightly over ?7 billion (Dh36,7bn) at the end of the year, from ?8.5bn at the end of June 2009. "At this stage we do not have any acquisition project to disclose," Levy said. Vivendi, a majority stake holder in Maroc Telecom and which recently bought a stake in a telecoms operator in Mali, remains keen on expanding in emerging countries.
But when asked about Zain, Levy said: "The Zain dossier is over ... We do not intend to pay more than what it was worth." Asked if he would again look at Zain's assets if offered a lower price, he said: "This issue in not on the agenda." Zain, whose shareholders voted to scrap individual ownership limits on Monday, is in negotiations to sell a stake in its African business. Levy also said Vivendi had not yet made a decision on the future of its 20 per cent stake in NBC Universal. It has an option to sell the stake each November until 2016.
