Vodafone considers bid for SFR

Vodafone is preparing to make an unsolicited cash offer for SFR, the French mobile phone company controlled by Vivendi Universal, in spite of indications by advisers to Vivendi that the media group hopes to hold on to its stake. Analysts have estimated that any offer could be in the region of GBP 8b. Vodafone is likely to use a GBP 6.7b unused bank facility to fund the purchase, with any shortfall made up of additional short-term bank borrowings.

Vodafone is keen to gain control of SFR because France is the only big European market where it does not have a controlling stake in its mobile operations. However, it declined to comment further. The UK mobile operator owns 32% of SFR through a 20% direct stake and a 15% holding in Cegetel, the French telecommunications business that in turn owns 80% of SFR. Vivendi has a 44% stake in Cegetel.

A formal offer could be made before the end of the month. The mobile operator is understood to be waiting for the expiry of ‘lock-up’ rights between Cegetel’s shareholders, which also include BT Group with 26% and SBC Communications of the US, which has 15%. The rights, which prevent any sale of shares without the full agreement of all investors, expire on September 23.

Written by The Financial Times for PMN Mobile Industry Intelligence.


Vodafone’s senior management expressed an interest in acquiring control of SFR several month’s ago, but it appears the company is now poised to make its move. The French market enjoys some of the most favourable conditions in Europe, including relatively low existing penetration (about 65%) and comparitively high ARPU.

Control of SFR would complete Vodafone’s pan-European footprint and secure its place in what analysts have suggested may be Europe’s most attractive 3G market. However, as the Financial Times points out, Vivendi may be unwilling to surrender its stake at a price consistent with the depressed telecoms market, even if it is desperate for cash. Much will depend on the success of Vivendi’s other asset sales and just how badly it needs Vodafone’s money.

Originally published by PMN Mobile Industry Intelligence, the subscription-based analysis and insight platform founded by Marek Pawlowski.

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