Vodafone sells its stake in SFR to Vivendi

04 April 2011 | Kavit Majithia


Vodafone has agreed to sell its 44% stake in French mobile operator SFR to Vivendi for €7.95 billion.

The deal further indicates Vodafone’s strategy to realign many of its strategic assets, in line with its recent divestments in Chinese and Japanese mobile operators over the past year. The proposed sale of SFR would be the company’s biggest disposal to date, and is expected to be completed in June.

Recent market reports suggest Vodafone will now focus on selling its 45% stake in Verizon Wireless, valued at approximately $43 billion.

In keeping with the company’s commitment to gain maximum value of its non-controlled assets, Vittorio Calao, chief executive at Vodafone said: “the sale of our stake in SFR, at an attractive multiple, represents a significant further step in the execution of this strategy.” Vivendi already owns a 56% stake in the French mobile operator and will take full control of the company.

Vivendi says the price represents a valuation 6.2 times that of SFR’s 2010 earnings, but many market watchers have since claimed the company has paid more for SFR than it was planning to when talks began last year.

“Several years ago, the balance of probabilities favoured Vodafone to take over SFR,” says Emeka Obiodu, analyst at Ovum. “By 2010, a shift in focus at Vivendi – along with Vodafone’s unwillingness to hang on to minority stakes – made a deal possible. Vivendi may have paid the price to push through the deal during this window in Vodafone’s strategic repositioning. Any hesitancy to match Vodafone’s asking price could have shut out a deal now, and the balance could well tilt to Vodafone in the future.”

The companies will continue to co-operate for the next three years at least, and have signed a roaming agreement for Vodafone customers to use SFR’s mobile network when in France.