On March 1, Vivendi reported 2009 results in line with the group’s expectations. Vivendi revenues were up 6.9% at €27.1 billion and its EBITDA up by 8.8% YoY at €5.3 billion. Although most activities but Universal witnessed revenue growth, the EBITDA growth was another story; Activision and Maroc Telecom (MT) were the only units to report an increase. Moreover, MT’s share of the group EBITDA was resilient in 2009 despite a challenging economic environment. These results confirm and reinforce Vivendi’s emerging market investment strategy.  Some takeaways:

Maroc Telecom from mere subsidiary to crown jewel

- MT reported revenues up by 3% YoY on a comparable basis and a 1.6% increase in EBITDA. By contrast, Vivendi’s other major telco operation, SFR, reported a 7.5% growth in revenues but a disappointing 0.5% decrease in EBITDA. MT’s share of group EBITDA dropped by 4 percentage points in 2009 to 23% while SFR’s contribution dropped from 57% to 46%. MT’s contribution to group revenue remained stable at around 12%. Most importantly, MT remains Vivendi’s most profitable telecom operation with EBITDA margins at 46% while SFR barely reached the 20%.   

- Vivendi expects Maroc Telecom to be a driver of growth in 2010 thanks in part to African subsidiaries.  In 2009, 57% of group mobile subscribers net additions were acquired across MT’s African operations, up from 50% in 2008.

Outlining African Investment Criteria

- Vivendi has invested nearly €550 million in acquisition across sub-Saharan Africa over the past three years. The group’s four African operations (Gabon, Burkina Faso, Mauritanie and Mali) generated an EBITDA of €83 million in 2009, up 186% from 2008. This performance has likely whetted the company’s appetite for more African acquisitions, as evidenced by a flirtation with Zain’s African assets last year, but in a context of rising African asset prices. In 2006, the median African mobile operator valuation was around 6.3x EBITDA according to our Mobile Profitability report. Two years later, that median had reached around 9x EBITDA. Bharti valued Zain at around 8x EBITDA in February 2010.

In its annual results statement, Vivendi’s board laid out key guidelines for further investments in emerging markets:  

• “Seize external growth opportunities with a focus on fast-growing regions / businesses, assessed under a selective, rigorous and financially disciplined process
• Focus on media and telecom subscription-based business models
• Profitable assets with strong growth prospects
• ROCE to exceed local risk adjusted WACC within 3 to 5 years
• EPS accretive in the short term”