Vivendi SA (VIVDY.PK) Morgan Stanley 11 th Annual TMT Conference November 17, 2012 2:50 AM ET Executives Patrick Wellington – Morgan Stanley Philippe Capron – CFO Presentation Patrick Wellington
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Also because – since we closed the deal with Vodafone in June, Q3 was the first quarter in which we started to have the benefit of having swapped 20% of NBCU for full control of SFR. And of course, this has an accretive impact on our earnings as well, which is what we're aiming at, and this is of course starting to materialize. This enabled us to revise our guidance. We had to revise it downwards first because we were at 3 billion and the total tax bill we are having to face from the government, because of the restriction on our ability to use our NOLs.We'll use only 60% of our NOLs going forward instead of the full 100% to taking advantage of Vivendi's NOLs and SFR's profits. This has an impact of 350 million this year and probably a similar impact next year. And so, we revised the guidance downward and then upwards because we think will do 200 million better meaning if the tax environment had not changed, we would be delivering 3.2 million. Since it has changed we will be delivering at 2.85 million, and of course analysts had expected a bigger downward revision. I must add, of course, that those tax effects are just calendar effects. We're not losing any NOLs. We will use them up over a longer period. It's just a timing impact. Patrick Wellington Yes, that was a bit frustrating to have the immediate effects of the tax benefit for the SFR be unwound, but you are now extending those NOLs out? Philippe Capron Yes, just the timing impact and the fundamental, the underlying improvements due to the ownership of SFR is still there, regardless of any tax considerations. Patrick Wellington I like to say you have been busy on the acquisition front this year. You have bought the minorities in SFR despite what it says in our company description. And – but you've also been active on the media side, so your content and platforms (inaudible) benefits of that combination?
Philippe CapronThat is good for media analysts. That is mostly why we do it. Actually we know that you guys are following the GVT acquisition and the reinforcement in SFR, where we are afraid that we would become a pure telco, so we did it purely for you. Patrick Wellington Thank you very much. We were very upset. Philippe Capron We reacted to (inaudible). It's not just, I mean, you do not choose the timing of your M&A activity basically. But we were happy to reinforce two of our very significant media businesses. BMI is a once-in-a-lifetime opportunity. I mean in a market which has suffered as much as the music industry is suffering, the opportunity for consolidation is of course very attractive. We feel that this will pass with the antitrust authority because the power has shifted so much towards the consumer with piracy and towards the distributors, especially the concentration of digital distributor is extremely high and that is where the real power lies. So, I feel we will be able to go ahead with this consolidation and it should yield very, very significant benefits. At a time when the music market, at least in the US, because it is now 55% or 60% digital and only 40% physical CDs, is starting to show some signs of recovery. And at a time when I should add the credit market was such that there was little competition, especially for the private equity investors, to grab that asset. On the Canal side, it is two very different deals. The opportunity to jumpstart our planned development into free to air by buying the Bollore channels at a time when GTT is not yet fully deployed in France. Seemed like a very good opportunity as well. Read the rest of this transcript for free on seekingalpha.com