* Posts record 2011 adj net profit of 2.95 bln eur
* Targets 2012 adj net profit of more than 2.5 bln eur
* Says 2013 to be difficult, sets no precise target
* Cuts 2011 dividend to 1 eur from 1.40 eur year ago
* Says lost 200,000 SFR mobile subscribers after Free entry
(Adds CEO comments, detail on outlook)
By James Regan
PARIS, March 1 (Reuters) – Vivendi, Europe’s
largest telecoms and entertainment group, faces two difficult
years as it wrestles with tougher competition in the French
mobile market and does not expect earnings to grow again until
2014.
The French company slashed its dividend on Thursday and
predicted a drop in core profit of up to 15 percent at its SFR
telecom business, which has lost around 200,000 subscribers in
the first two months of the year.
SFR, Vivendi’s biggest unit, has been locked in a mobile
price war since mid-January when Iliad’s Free Mobile
shook up the French market with ultra low-cost offers.
“The excessively favourable conditions granted to the new
mobile operator by the regulator, the state and the incumbent
operator, lead SFR to reconsider very carefully its commercial
offers and its cost base,” Vivendi Chief Executive Jean-Bernard
Levy said.
The CEO said adjusted net profit would decline this year to
more than 2.5 billion euros, down from a record 2.95 billion ($4
billion) last year. He added that 2013 would also be difficult,
with profit growth set to resume only in 2014.
Shares in Vivendi were 3.3 percent lower in Frankfurt
trading. The stock has fallen about 5 percent this year.
SFR has responded to Free with price cuts for a swathe of
mobile offers and aggressive customer retention efforts.
Rival Bouygues Telecom has said it is cutting
costs to help offset an expected 10 percent sales slide this
year due in part to the increase in competition.
France Telecom said last month it had lost 201,000
mobile customers, prompting it also to take a knife to its
dividend, as well as putting off a share buyback promised for
this year using proceeds from the sale of its Swiss unit.
Instead it pledged to conserve cash in the face of tougher
mobile competition and the euro zone debt crisis.
Analysts predict Vivendi, France Telecom and Bouygues
Telecom will become structurally less profitable as Iliad takes
market share in the coming years, draining cash flows and
eroding margins for the larger players.
DIVIDEND CUT
Vivendi said it would reduce the dividend paid to investors
on last year’s results to 1 euro per share from an unchanged
1.40 euros a year ago, with shareholders also receiving one
share for every 30 owned.
Vivendi achieved a 9.4 percent rise in adjusted net income
in 2011, helped by its GVT Brazilian telecom and Activision
Blizzard video game units. Earnings were also boosted as the
group took full ownership of SFR after buying out partner
Vodafone’s minority stake for about 8 billion euros.
Vivendi had cut its profit forecast in November to more than
2.85 billion euros, against 3 billion previously, after the
French government hiked corporate tax rates to help cut the
national budget deficit, leading to 600 million of extra costs.
The group warned on Thursday that in terms of higher taxes
there were “potentially more to come in 2012″.
Revenue inched 0.5 percent higher last year to 28.8 billion
euros.
Activision Blizzard said on Wednesday it was cutting 600
jobs globally out of 7,300 in the unit that makes Internet games
including the company’s most profitable property, “World of
Warcraft”, which has lost users in recent quarters.
($1 = 0.7476 euros)
(Editing by Hans-Juergen Peters)
Link to article:
Recent Comments