French media conglomerate Vivendi announced in a short statement this morning that it has called-off talks to acquire a majority stake in Zain’s African mobile businesses. “Vivendi has applied its usual criteria of profitability and financial discipline to this potential investment in emerging markets, in the best interests of its shareholders,” the firm said. According to a Dow Jones Newswires report, investors reacted positively to the news, sending Vivendi shares up 3.9 percent in early trading. “It seems this is Vivendi’s final decision and it’s good news as such an operation would not have been compatible with Vivendi’s financial constraints,” said a Paris-based analyst. The cost of the deal, estimated to be around US$10 billion, was deemed to jeopardise Vivendi’s credit rating. Ratings agency Standard and Poor’s had earlier put Vivendi on watch for a possible negative review if discussions with Zain advanced.

Vivendi confirmed its interest on 10 July, noting that the “acquisition would enable Vivendi to capitalise on its successful experience of developing mobile telephony in Africa.” Vivendi is already present on the African continent via its 53 percent stake in Maroc Telecom, which also has operations in Mauritania, Burkina Faso, Gabon and Mali. Vivendi also owns a 56 percent stake in French mobile operator, SFR. Zain has been rumoured to be looking at a sale of its 16 African mobile networks for several weeks now, noting in a statement earlier this month that it has appointed UBS and others to review its options. Zain’s African businesses (which it only acquired in 2005 following its acquisition of Celtel) account for 16 of the group’s 23 markets and around 65 percent of the group’s customers. According to a report by Kuwaiti daily Al Qabas, Zain is also considering rival bids from Chinese and Indian firms.