Strong Vivendi takes FT to task over fixed access

Jean Bernard Lévy, CEO of Vivendi, said his company would take France Telecom to the European competition authorities because its rival was exploiting a dominant market position, the Financial Times reports.

Lévy was quoted saying, "In a nutshell, it is 11 years since the fixed-line business was supposedly open to competition. After 11 years, France Telecom still has an overwhelming position."

He claimed that France Telecom made 85% of the profits available in French fixed-line telecoms, with Iliad (part of 3), and Vivendi's SFR accounting for the outstanding 15%.

"How can we compete in a market where the dominant player still controls 85% of the margins and we are supposed to invest in fibre optics and so on‾ It is, in my view, a pretty basic competition case," the FT report went on, quoting Lévy.

He said that Vivendi, whose SFR division will be joined in the action by Iliad, had other complaints about wholesale tariffs and the basic fees charged to consumers for subscription to landlines.

Interestingly, Vivendi has gone on the attack from a position of strength, not desperation. Having very nearly gone out of business altogether in 2002 after a string of unwise acquisitions under the leadership of Jean-Marie Messier, the media and telecoms conglomerate has just reported a strong balance sheet for 2008.

True, the solidity of the figures are somewhat disguised by a number of one-off charges, such as a write-down on its stake in NBC Universal, but the good thing about one-off charges is that they are just that.

Vivendi reported revenues up 17.2% €25.4 billion ($31.9 billion) in 2008, largely driven by its acquisition of games manufacturer Activision and the Neuf Cegetel mobile business.

Lévy was quoted by the FT saying he expected that next year Vivendi, (which also owns Universal Music Group, the world's largest record company, and Maroc Telecom of Morocco), would exceed the 4.9% growth in operating profits it achieved in 2008 to reach €4.9 billion.

The company said it would maintain its policy of using half of net income to make a return to shareholders. It also lifted its dividend 7.7%.

Lévy also said his company had not agreed a price with Spain's Grupo Prisa for its Digital Plus satellite television business.

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