Vodafone casts an eye over SFR

RUCTIONS at the top of Vivendi Universal may pave the way for Vodafone to take control of French mobiles group SFR. Vivendi's embattled chairman and chief executive Jean-Marie Messier has said that its £6bn of telecoms assets, which include a 45% stake in the fixed-line operator Cegetel, and a 35% stake in SFR, are at the heart of the group.

But as the group's market value has tumbled from £46bn to around £14bn, he has become increasingly isolated. Even if he survives, he may bow to pressure to focus the group on its media activities. Vivendi has around £12.4bn of debt.

Only last week Messier fell out with his closest board-room ally, the luxury goods billionaire Bernard Arnault. Then it emerged that the Bronfman family, shareholders of the Seagram media group Vivendi bought in 2000, may call an extraordinary general meeting to debate his leadership.

Media analysts believe that Messier will have to split his role between chairman and chief executive to enable the company to regain some of its credibility with stock markets.

Vodafone has long said that it would like to increase its stake in SFR and with debts of £12bn against a £60bn market value, it has plenty of cash to come to Vivendi's aid. Just how they would structure the deal remains a puzzle, as Vodafone will not be able to spin off SFR without the consent of Cegetel's other shareholders - BT and the US telecoms giant SBC.

That problem may be resolved in September, when an agreement that gives shareholders the right to veto any share sale expires.