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Viv U sees telco twist

'Standstill' reg another battle in the war for Cegetel

PARIS — Vivendi Universal announced Friday evening that Vodafone had terminated a mutual clause that prevented the British telco from buying any Viv U shares, indicating that Vodafone is planning to make another run at Gallic mobile phone company SFR.

The “standstill” clause was signed in January 2000, when Viv U and Vodafone jointly started Internet portal Vizzavi — the linchpin in ousted Viv U topper Jean-Marie Messier’s vision for the French conglom — and which was subsequently sold to Vodafone last September as current topper Jean-Rene Fourtou began to unravel Messier’s fallen empire.

Vodafone could terminate the clause but was required to give Viv U six months’ notice. The British telco did just that last week, setting a January expiration date.

Move appears to mark the start of another battle in the war for French telco Cegetel, which owns 80% of cash cow SFR, the ultimate target in the ongoing struggle between Viv U and Vodafone.

Vodafone said in June that it was still interested in SFR.

Whoever owns the keys to Cegetel’s coffers ultimately holds a 35% stake in the French mobile phone market through SFR and a continuing source of income.

Viv U, which controls 56% of SFR, said Cegetel posted $1.14 billion of free cash flow in 2001, a figure expected to rise 6% annually through 2004. Revenue of $6.4 billion will rise an estimated 10% annually over the same period.

Industry watchers speculate that Vodafone, which controls 43% of SFR, has been waiting for an opportunity to make another go at the mobile phone company, and with Fourtou busy with negotiations for Viv U’s entertainment assets, may have found its moment.

Many believe that, after disposing of VUE, among other assets, Fourtou plans to reposition the French conglom around its telecom operations.

Still, with Fourtou’s unpredictability in selling off Viv U’s assets, the move could also signify Viv U’s willingness to sell a stake in SFR if the price is right.

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