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Vivendi — Investor Presentation (January 2008)
37 slides from Vivendi's investor presentation, January 2008
Slide 1: Further strengthen our leadership in the entertainment sector
Further strengthen our leadership in the entertainment sector January, 2008 IMPORTANT NOTICE: INVESTORS ARE STRONGLY URGED TO READ THE IMPORTANT DISCLAIMER AT THE END OF THIS PRESENTATION
Slide 2: Vivendi: clear strategy, in the digital media age
Vivendi: clear strategy, in the digital media age Capitalize on consumer demand for mobility and broadband that drives new services and new revenue streams in the world of entertainment Further strengthen our leadership in superior content and distribution businesses to enhance growth and value 2
Slide 3: Vivendi's strategy into action
Vivendi’s strategy into action In 2003 we achieved a streamlined perimeter focusing on five businesses with the goal to reach the highest level of leadership and profitability In recent years, we have executed on our strategy, reshaping and strengthening our businesses to position them to maximize v
Slide 4: Vivendi strengthens its leadership in its businesses
Vivendi strengthens its leadership in its businesses Two recent significant announcements complete and strengthen our leadership in our businesses… Vivendi and Activision will create Activision Blizzard, leader in interactive entertainment, world’s largest and most profitable "pure play" video game
Slide 5: Vivendi strengthens its leadership in its businesses
Vivendi strengthens its leadership in its businesses … Following strategic transactions finalized over the last 18 months : UMG: Acquisition of Bertelsmann Music Publishing Acquisition of Sanctuary Canal + Group: Acquisition of TPS and creation of Canal + France SFR: Acquisition of fixed and ADSL ac
Slide 6: Activision Blizzard
Activision Blizzard vivendi
Slide 7: Vivendi Games and Activision to create Activision Blizzard: a worldwide leader
Vivendi Games and Activision to create Activision Blizzard: a worldwide leader Proposed merger of Activision and Vivendi Games Excellent complementary businesses Activision’s strengths - Console + US market Vivendi Games’ strengths - Online / PC + Asia Global leader in dynamic, high margin online ga
Slide 8: Activision Blizzard enhances Vivendi's Strategy
Activision Blizzard enhances Vivendi’s Strategy Further strengthens our leadership position in the entertainment sector Exchange 100% stake in highly profitable medium-size worldwide publisher plus cash for majority stake in a global interactive entertainment leader Invest $1.7B to $2.4B cash demons
Slide 9: Activision Blizzard: many benefits for Vivendi
Activision Blizzard: many benefits for Vivendi Investment in a high margin sector with rapid growth Use our financial flexibility to enhance the growth of our assets Realization of Vivendi Games’ value by unlocking the value of Blizzard Entertainment Accelerated optimization of Vivendi’s investments
Slide 10: Transaction Structure & Terms
Transaction Structure & Terms Step One (at closing): 358.2M Shares Activision (52% ownership) Vivendi $1.7B Cash $8.1B Vivendi Games Vivendi acquires 358.2 million shares in exchange for its gaming assets (valued at $8.1 billion) and $1.7 billion cash Value of $27.50 per Activision share, 31% premiu
Slide 11: Transaction Structure & Terms
Transaction Transaction Structure Structure && Terms Terms Step Two (post closing): $4 billion cash tender offer for up to 146.5 million shares at $27.50 per share, representing 50% of outstanding Activision shares (pre-transaction) Fully subscribed tender would result in Vivendi ownership of 68% an
Slide 12: Most Profitable Pure-Play in Sector
Most Profitable Pure-Play in Sector Operating Income Operating Margin CY2007e CY2009e* CY2007e CY2009e* $1.1B 25+% 18.6% $700M THQ1 EA1 Activision Activision THQ1 EA1 Activision Activision Blizzard2 Blizzard3 Blizzard2 Blizzard3 1 Projected CY07 - Wall Street estimates and company financials 2 ATVI
Slide 13: Activision Blizzard Earnings Power
Activision Blizzard Earnings Power Calendar 2009* Operating Margin : 25%+ Revenue : $4.3 Billion Operating Income : $1.1 Billion EPS : $1.20+ Activision Blizzard business growth of 14% with 3-4 points of Improve Sierra’s operating margin expansion performance by $160 million, over 2 years delivering
Slide 14: Next Steps
Next Steps Expected closing 1H 2008 Activision Regulatory and Closing shareholder vote (more than 50% • Tender offer opens Tender offer closes antitrust approvals approval required) • Integration begins 14
Slide 15: Activision Blizzard
Activision Blizzard A transaction welcomed by the investor community : Activision’s share price increased $3 after announcement Shares have continued to increase in price since then, like other stocks in the sector A worldwide leader ideally positioned to maximize growth and enhance profitability 15
Slide 16: SFR / Neuf Cegetel
SFR / Neuf Cegetel a a * Pe sae - ‘i zn al - i a a” tie Svivendi Le DiverTISSEMENT EST UN BESOIN VITAL <4 senent ext v 2 ager wl vivendi 16
Slide 17: SFR / Neuf Cegetel: a compelling opportunity at the right time
SFR / Neuf Cegetel: a compelling opportunity at the right time First Fixed / Mobile alternative operator in Europe Alternative leader in France and creation of a real contender to France Télécom in all segments (Mass Market and Enterprises) Change in scale and financial support of SFR allowing for F
Slide 18: SFR has been an active player in fixed-ADSL since deregulation
SFR has been an active player in fixed-ADSL since deregulation SFR has participated in fixed telecom since 1997: 86% Cegetel + 49% of Telecom Development JV with SNCF SFR has taken part in the consolidation of the sector: Cegetel + Neuf Telecom merger creating a viable entity in August 2005 SFR has
Slide 19: Potential transaction terms
Potential transaction terms Ownership structure before transaction Potential acquisition (1) of Group Louis Dreyfus’ stake in Neuf Cegetel, increasing SFR ownership to 68.59% (2) 56% 44% Price per share of €34.50 (dividend attached). Depending on when the transaction is completed, up to €40m additio
Slide 20: French Telecom market growth driven by mobile and Internet
French Telecom market growth driven by mobile and Internet 2012 2007 Market total value: €41bn Market total value: €39bn Fixed/Mobile substitution Fixed voice Fixed voice + access + access Access + Fixed/VoIP Mobile Mobile substitution voice Voice Internet / Internet / & data / & data / fixed data f
Slide 21: A fast changing telecom landscape
A fast changing telecom landscape FTTH technology breakthrough Growing demand for convergent offering, including in the Enterprise segment Increasing need for capacity (especially at home) driven by new usage Evolution of voice and data offerings: continuity of usage, simplicity, personalization, ab
Slide 22: Reach scale and flexibility to cope with rapid market changes
Reach scale and flexibility to cope with rapid market changes Alternative leader and creation of a real contender to France Télécom in all segments (fixed/mobile and Mass Market/Enterprise) equivalent market share target of 33% Scale to accelerate FTTH deployment SFR’s financial resources + Neuf Ceg
Slide 23: Creation of a real contender to France Télécom in all segments
Creation of a real contender to France Télécom in all segments Fixed/mobile convergence + Fixed revenue share Importance of Enterprise segment Mobile revenue share Source: Brokers estimates and SFR estimates for CY2007 23
Slide 24: Neuf Cegetel: Steady growth
Neuf Cegetel: Steady growth A strong track record of growth Pro forma - bn€ At Neuf Cegetel FY2007E merger (2005) DSL mass market subs 1.2 m >3.1 m* Market share 13% >21%* Enterprise data links 103k >165k* Revenue 1.8 3.3** EBITDA 0.2 0.7** EBITDA margin 9,7% >21%** Capex 0.3 0.4** CFFO -0.1 0.3** *
Slide 25: SFR and Neuf Cegetel: highly complementary platforms
SFR and Neuf Cegetel: highly complementary platforms Strong #2 in mass market for both mobile and ADSL in France SFR: #2 mobile operator with 18m customers 9C: first alternative fixed / internet operator with 3.1m DSL customers (21% broadband market share) Premier alternative broadband networks SFR:
Slide 26: Vivendi: Other recent strategic events
Vivendi: Other recent strategic events 26
Slide 27: Universal Music Group strengthens its global leadership
Universal Music Group strengthens its global leadership Integration of BMGP on track The acquisition of BMGP enhances the strategic position and value of Universal Music Group as the world’s leading recorded music company and music publishing company €1,639 million paid in December 2006 Unique, irre
Slide 28: Canal+ Group: Success of the TPS integration
Canal+ Group: Success of the TPS integration CanalSat/TPS integration process on track: Voluntary redundancy plan finalized Launch of the technical migration of TPS subscribers Exclusive content renegotiated and secured: Acquisition of top sports events: French Premiership (TOP 14) rugby championshi
Slide 29: Canal+ Group: 2010 objectives announced in March 2007 are confirmed
Canal+ Group: 2010 objectives announced in March 2007 are confirmed Robust growth in projected revenue : > €5 billion in annual income 11.5 million subscriptions to CANAL+ France 2010 EBITA > €1 billion Significant cost synergies projected: > €350 million euros 29
Slide 30: Maroc Telecom: International development
Maroc Telecom: International development Integration of the recent acquisitions of Onatel (Burkina Faso) and Gabon Télécom to enhance future growth and profitability: Growth of mobile customer base by more than 40% in the first nine months Reorganisation: cost killing, IFRS compliant, refinancing La
Slide 31: Vivendi: Impact on balance sheet of the recent transactions
Vivendi : Impact on balance sheet of the recent transactions 31
Slide 32: Vivendi: changes in the structure of the balance sheet
Vivendi : changes in the structure of the balance sheet © Estimated net debt, end of 2007 ~€5.5bn Potential impact on net debt from recent transactions: Activision Blizzard and Neuf Cegetel €7.7bn Activision Blizzard: : €2.2bn $1.7bn in cash concurrently with the exchange of Vivendi Games for 52% of
Slide 33: Vivendi: changes in the structure of the balance sheet
Vivendi: changes in the structure of the balance sheet Small margin to manoeuvre caused by the very difficult conditions in the credit market Given : The desire to retain our financial and strategic flexibility in 2008-2009 to seize opportunities for minority buyouts (i.e. Canal + France), or growth
Slide 34: Confirmation of our 2007 goals
Confirmation of our 2007 goals 2007 Outlook Adjusted net income above €2.7bn (1) Distribution rate of at least 50% of Adjusted Net Income (1) After transition costs related to the Canal+ / TPS merger 34
Slide 35: Investor Relations Team
Investor Relations Team Daniel Scolan Executive Vice President Investor Relations +33.1.71.71.14.70 daniel.scolan@vivendi.com Paris 42, Avenue de Friedland 75380 Paris cedex 08 / France New York 800 Third Avenue Phone: +33.1.71.71.32.80 New York Fax: +33.1.71.71.14.16 NY 10022 / USA Phone: +1.212.57
Slide 36: Important Legal Disclaimer (1/2)
Important Legal Disclaimer (1/2) This presentation contains forward-looking statements with respect to the financial condition, results of operations, business, strategy and plans of Vivendi. Although Vivendi believes that such forward-looking statements are based on reasonable assumptions, such sta
Slide 37: Important Legal Disclaimer (2/2)
Important Legal Disclaimer (2/2) Calculation of Certain Estimates All financial information relating to Activision, Vivendi Games and Blizzard Entertainment included in this presentation, including pro forma estimates for calendar year 2007, and projections for future periods, represent the companie