SFR to increase stake in Neuf Cegetel

French conglomerate Vivendi said Thursday its mobile phone subsidiary, SFR, is in talks to buy up a further stake in fixed line carrier Neuf Cegetel.

SFR would buy a further 29 per cent stake in the fixed line operator from trading group Louis Dreyfus for around Eur2.07bn.

The French mobile operator already owns 40.5 per cent of Neuf Cegetel and the deal would position the combination of fixed and mobile companies as a stronger competitor to incumbent carrier France Telecom.

Parent Vivendi, said the transaction would represent an important step in SFR’s strategy by allowing the company to invest in fibre optics capacity; accelerating its fixed-line/mobile convergence strategy for businesses and individuals; and integrating a growing asset.

SFR is 56 per cent owned by Vivendi, with Vodafone holding the remaining 44 per cent.

Jean-Bernard Levy, chairman of Vivendi’s management board, said: “This investment is a very attractive opportunity for Vivendi to strengthen its position and development in one of its main business sectors. The planned agreement would make it possible to merge two companies with increasingly complementary and healthy businesses and would create value for Vivendi shareholders.”

SFR said it would finance this transaction through debt, notably with Vivendi granting a loan under market terms. To repay this loan, SFR has agreed to considerably reduce dividend payments that it would pay in the three next financial years.

Vivendi said it plans to raise funds of Eur1 to Eur2bn from its shareholders at the appropriate time.