Vivendi, French gov’t in standoff over fees

3G licence's current value disputed by conglom

PARIS — Vivendi Universal was locked in a billion-dollar standoff with the French government Tuesday over the hefty $4.5 billion it agreed to pay earlier this year for a third generation mobile phone license.

Having threatened to withhold a first installment, sparking fury in French government circles, the conglom caved in late Monday night and coughed up $569.5 million.

Still wants discount

But still determined to bargain on Tuesday, Philippe Germond, prexy of Vivendi U’s French mobile operator SFR, called for a “very significant reduction” in the fixed price agreed to in a “beauty contest” in January. He claimed French law would be on Vivendi’s side because of the economic downturn.

“The financial markets have plummeted,” Germond said. “Without mentioning Sept. 11, 3G is already one or two years behind schedule, and around 50 local authorities have passed laws banning transmitters at less than 100 meters from residential areas.”

Late Tuesday, the government agreed to review the 3G package.

Only two takers

The French sale, which came at a time of growing skepticism over the money-spinning potential of mobile licenses, turned out to be one of Europe’s least successful, with only two out of an available four licenses finding takers. France Telecom was the other buyer. Bouygues, France’s third mobile group, pulled out, saying the price was too high.

The French government has promised to review the price paid by the first-round bidders when it holds a second round to sell the remaining two licenses. It has also proposed extending the licenses from 15 to 20 years.

But those measures do not go far enough for Vivendi U. Germond said the conglom was interested in a suggestion from the telecom regulator ART involving a “five-year freeze on payments and with a resumption that could be progressive taking into account the growth in revenues.”

Germond added: “If 3G licenses turned out to enjoy huge success over the next 10 years and exceeded our business plan, the price could be revised upwards.”

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