Telepiu deal also goes under EU review

Vivendi Universal will announce plans to bid for control of lucrative French telco Cegetel after a meeting with its board of directors in Paris this morning.

A successful Cegetel bid will put more pressure on CEO Jean-Rene Fourtou to clarify his intentions regarding Viv U’s entertainment assets. Certainly the additional financial drain generating from a Cegetel purchase could necessitate some monetization of Viv U Entertainment if the company is to fulfill its debt reduction campaign. Conglom officially rejected Marvin Davis’ $20 billion offer for Viv U Entertainment, but the two sides are due to reconvene in January.

Viv U sources declined to comment on speculation in the Financial Times late Monday that the company will preempt Vodafone’s offer to co-Cegetel minority holder BT. Company hinted last week that it was close to having the necessary financing in place to acquire control of Cegetel. The price for BT’s 26% stake was estimated to be in the vicinity of $3.75 billion.

It is more likely that Viv U will make a bid for SBC’s 15% stake in Cegetel, which would put Viv U, which already owns 44% of the telco, easily over the control threshold without having to spend as much cash.

Vivendi last month rejected Vodafone’s $6.8 billion offer for its own stake in Cegetel on the grounds that the price was too low. According to the Financial Times report, Viv U was looking for as much as $8.5 billion. This stance was likely just a negotiating tactic, though Vodafone argues that terms of its deal restrict it from raising its offer. The preemption is expected to go to court, further delaying a resolution.

EU probes Telepiu deal

Separately, European Union regulators Monday launched a probe into the €893 million ($883 million) joint acquisition of Vivendi Universal’s Italian pay TV operator Telepiu by Rupert Murdoch’s News Corp. and Telecom Italia.

Brussels said the deal creates “a near monopoly in Italy” by leaving the country with only one pay TV company and “raises competition concerns regarding the acquisition of broadcasting rights for ‘premium’ content such as blockbuster movies and football matches.”

The involvement of Telecom Italia in the acquisition also meant it could affect Italy’s broadband Internet market, the EU said.

The probe is bad news for News Corp., which had looked set to wrap up another European market. Its satcaster BSkyB already dominates pay TV in the U.K. It is also a blow for Viv U, which is counting on the sale to help lighten its $18.4 billion in debt.

Murdoch wants to merge Telepiu with News Corp./Telecom Italia’s pay TV venture Stream, creating a new entity, Sky Italia. News Corp. would control 80.1% of this new company, which would have about 2.5 million subscribers, while Telecom Italia would have 19.9%.

Italian antitrust authorities have already approved the proposals, but Brussels is considering a renegotiated version of that deal.

A spokesman for News Corp. said that the company would continue to cooperate with the EU investigation and hopes it will reach a speedy conclusion. “The Commission has a maximum of four months, but we think it will be solved sooner than that,” he said. “We don’t anticipate any major problems.”

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