Vodafone and Vivendi end up unlikely partners in France

NEWS Vodafone has withdrawn its E6.77bn offer for Vivendi's 44 per cent interest in French telco Cegetel. The move came late yesterday as Vivendi decided to demerge its interests in the Universal group of companies in the US - including music, film and theme park assets - and exercise its right to buy BT Group's 26 per cent stake in Cegetel. Although the move can be interpreted as Vivendi drawing a line in the sand, saying it will operate solely in its domestic telecoms market, Vodafone said it will be left with 30 per cent of Cegetel once it acquires the 15 per cent of the company currently owned by SBC Communications of the US for E2.3bn in cash. Vodafone points out the French market is still strategic within its wider plans, with 15 per cent of Europe's population but only 63 per cent mobile penetration. The way the deal works out, Vodafone will also be left with 43.9 per cent of Cegetel's mobile arm SFR, the business it is primarily interested in. Vodafone had previously refused to increase its offer for Cegetel. Instead of selling to Vodafone - in order to reduce its debt mountain - Vivendi chose to jettison Universal, presumably with a view to dropping the word from its corporate name.