French media conglomerate Vivendi has warned of “drastic and structural changes” at its mobile arm, SFR, as the country’s number-two operator felt the effects of fierce competition and regulatory pressure in Q1.
SFR was partly responsible for the group reporting a 13.4 percent slump in net income (to EUR823 million) and a 0.9 percent decline in revenue to EUR7.1 billion. Sales at SFR declined 4.2 percent to EUR2.93 billion, while mobile revenue was down 6.8 percent to EUR1.99 billion.
The operator lost 274,000 mobile subscribers during Q1 following the launch of Iliad’s Free Mobile in January, which has disrupted the market with a low-cost offering. Market-leader Orange France lost 615,000 mobile customers over the same period.
“Even though the price cuts caused by the new competitive environment have not yet had a significant impact in the first quarter, the several price cuts imposed by the regulators weighed heavily on SFR,” said the firm in a statement.
“We have been designing plans to adapt SFR to the new competitive environment,” said Philippe Capron, Vivendi’s chief financial officer, on an earnings call. “As always you have quick wins and easy-to-implement things, and more drastic and structural changes. We have both things in our plans.”
He noted also that a board review was underway that could see Vivendi review its “perimeter” – which could possibly lead to the firm spinning-off some assets. As well as SFR, the firm also owns Universal Music, games-maker Activision Blizzard, and the pay-TV group Canal Plus.Subscribe to our daily newsletter Back