France may move to block a sale of SFR

The French government indicated its unease over the possible sale of Vivendi's SFR, with a government minister saying that France may move to block a sale depending upon the circumstances.

"We will make sure that the company [SFR] does not end up in the hands of unscrupulous shareholders," Fleur Pellerin, the French minister for digital economy, told the newspaper Le Figaro in an interview.

"SFR is a particularly sensitive and strategic business for France, and the state will be very attentive to the evolution of the capital of SFR," Pellerin said. "We are also paying special attention to the capital structure of Vivendi."

Pellerin used the interview to clarify that a merger of SFR and the French cable operator Numericable would not break the government's commitment to having four mobile operators. "Such a merger would not be a return to three operators, as Numericable is only active in the fixed telecoms sector."

The likelihood of Vivendi disposing of SFR has grown following the appointment to its board of Vincent Bolloré, a French billionaire better known as a corporate raider with particular skills in restructuring ailing companies and disposing of ill-fitting subsidiaries.

People with knowledge of how Bolloré operates stress that it is "too crude" to say he does not like telecoms, according to the Financial Times. But with the exec being labelled in France as "le petit prince du cash flow"--and having clear doubts about the heavy capital expenditures the telecoms industry needs--he has favoured media investments in the past.

While advocates for a shakeup within Vivendi are enthused by the appointment of Bolloré (who has increased his holding in the company to above 5 per cent), UBS analyst Polo Tang said in a research note carried by Reuters that "we believe disposals may either take longer than expected to achieve or that prices may be lower than expected."

For more:
- see this Le Figaro article (translated via Google Translate)
- see this Reuters article
- see this separate Reuters article
- see this Financial Times article (sub. req.)

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