SEPTEMBER LETTER 2013 TO OUR SHAREHOLDERS THE STRATEGIC REVIEW TAKES SHAPE JEAN-FRANÇOIS PHILLIPE CAPRON ivendi has made Our leadership positions in media will DUBOS MEMBER OF CHAIRMAN OF THE THE MANAGEMENT major advances on allow us to satisfy the digital giants’ MANAGEMENT BOARD AND CHIEF its strategic review strong demand for content. We intend to BOARD FINANCIAL OFFICER Vduring the last several link Vivendi’s future to these rapidly months. We have entered into exclusive growing markets. But we are not ne - negotiations with Etisalat to sell our glecting our telecom assets where new stake in the Maroc Telecom group and opportunities are offered by the explo - we will also sell over 85% of our stake sion in data traffic and fixed and mobile in Activision Blizzard. SFR and Bouygues broadband networks. The proposal to Telecom are in talks to share a portion share part of SFR’s and Bouygues Tele - of their mobile networks. Universal com’s mobile networks is fully consistent Music Group is successfully completing with this direction. the integration of The transactions entered into during EMI Recorded Music recent months allow us to envisage new ADJUSTED and Canal+ Group growth stages. With a portion of the FINANCIAL NET DEBT* has successfully re - proceeds from the two sales, Vivendi launched channels will reduce its debt and strengthen its €6.5 billion D8 and D17. balance sheet. The Supervisory Board Taking into account the excepted proceeds from the will determine the use of the balance. disposals of the Maroc Telecom group, Activision These transactions Blizzard (over 85%) and music assets as if the sales had been completed on reflect our commit - The coming months will see the completion 30 June 2013. ment to refocus on our of these various transactions and enable us media and content operations to move forward towards new growth and maximize the value of our telecom stages with an unchanged objective: create assets. The face of Vivendi is evolving. value for our shareholders. I RESULTS 2 THE 2013 MEDIA SUBSIDIARIES FEEL OF J HALF-YEARLY WA RESULTS THE INITIAL EFFECTS OF GROWTH DRIVERS IN PLACE As of June 30, 2013, Vivendi’s revenues stood at €10.8 billion, down 1.5% compared to the REVENUES (1) first half of 2012, and EBITA amounted to €1.391 billion, down 27%. The media subsidiaries and SFR, for the most part, recorded an improvement in operating margin in the second €10.842 billion quarter of 2013 versus the first. ivendi’s 2013 first-half and Canal+ Group successfully per IFRS 5, Activision Blizzard results were notably resisted, despite restructuring and the Maroc Telecom group affected by the deteri - charges and transition costs re - were treated as activities he ld oration of SFR’s mar - lated to the initial months of in - for disp osal – the se two pro j - (1-2) V EBITA : gin, due to a highly competitive tegration of acquisitions and ects were ann ounced on 23 and market in which the leading growth opportunities put in 26 July respectively – and were €1.391 billion concern was to win back sub - place in recent months. excluded from the first-half scribers (an additional 809,000 Moreover, the interpretation of 2013 and first-half 2012 ad - mobile customers were added Vivendi’s Consolidated State - justed income statement. How - in the first half). ment of Earnings for the first ever, they were still recognized GVT, for its part, was confronted half of 2013 requires some clar - in earnings attributable to with slower economic growth in ification. The magnitude of the Vivendi SA shareowners (€1.035 G (2) Brazil, as well as social move - aggregates differs, in fact, from billion, down 11.2% versus the M U FINANCIAL NET DEBT I O ments. Universal Music Group those of previous periods. As first half of 2012). T O H €6.5 billion , P adjusted for the expected proceeds from disposals in progress (3) , versus 13.4 billion euro at 31 December 2012. uoyed by free-to-air TV chan - Bnels D8 and D17, as well as by Poland’s multichannel pack - Full year outlook age “n”, Canal+ Group’s rev - confirmed for enues rose to €2.6 billion, an Universal Music Group increase of 5.3%. The success of D8 continues unabated: as of and slightly adjusted June 30, its audience share stood for Canal+ Group, at 3.4%, versus 2.3% a year ear - GVT and SFR. lier. Shows such as Cyril Ha - nouna’s Touche pas à mon poste, Guy Lagache’s Enquêtes d’actu - 1) For the f our companies within the alité and La nouvelle Star were perimeter. As from the second quarter particularly well received by the A portfolio of 2013 in compliance with IFRS 5, public. Activision Blizzard and the Maroc Telecom of 14 million group have been reported as discontinued During the first half, Canal+ CYRIL HANOUNA, TIED FOR BEST TV PRESENTER subscriptions operations and are excluded from the Group signed several agreements adjusted income statement. IN 2013, HOSTS “TOUCHE PAS À MON POSTE” NIGHTLY (2) For a definition of adjusted operating to strengthen its sports program - profit and financial net debt, consult the ming (including exclusive rights 2013 interim financial report on cluding an agreement with HBO weighed nonetheless on first-half www.vivendi.com. agreements to broadcast Eng - (3) According to the terms known to date land’s Premier League and the for the next five seasons and an 2013 EBITA, which stood at €449 and excluding the expected proceeds Formula One World Champi - agreement with A+E Networks). million (excluding transition costs froms the sale of remaining 83 million Activision Blizzard shares owned. onship), as well as series and The decline in the advertising of €19 million related to the inte - documentary programming (in - market and investment in content gration of D8, D17 and “n”). 2 3 THE ACOUSTIC VERSION OF JUSTIN BIEBER’S ALBUM WAS A RESOUNDING SUCCESS niversal Music Group’s rev - Digital business continues to Uenues increased by 16.3% grow (e.g. songs downloaded on to €2.236 billion due to the acqui - the Internet, subscriptions to sition of EMI Recorded Music and music sites, Internet radio audi - to the success of such artists as ences, royalties, etc.) and digital Rihanna, Imagine Dragons and sales repre sented 53% of total Justin Bieber. The transaction music sales, versus 47% a year wa s completed on September 28, ea rlier. 2012. This cha ngeover from physical to G I ts EBITA amounted to €143 mil - digital sales occurs at a time M U O lion, up 8.3%. Excluding restruc - when Universal Music Group has T O H turing and integration costs, it consolidated its leadership posi - P was up by 6.2%. tion through the acquisition of EMI Recorded Music. It will thus be able to make its voice heard more forcefully in the face of Digital music competition from the Internet sales topped giants and will be in a better po - sition to benefit from the rede - 50% of total ployment of the market, having G M completed an advantageous U O T financial transaction. In addition O H P to synergies from the merger of 70% of the uring recent months, SFR by year-end 2013, including half population soon Dhas continued its restructur - in 4G. to have Dual Carrier ing plan and announced exclu - In the broadband Internet seg - 4G coverage sive negotiations to share a ment, SFR is investing €150 portion of its mobile network million annually in fiber optics, with Bouygues Telecom. This which it has already deployed in partnership, which has yet to ov er 7 0 municipalities. Faced with a very competitive be approved by representative market and the imposition of and regulatory bodies, is a lower prices by regulators, SFR’s first in France but has already first-half 2013 revenues fell by been implemented in certain 11.3% to €5.108 billion and its European countries. EBITDA am ounted to 1.47 billion SFR has not slowed its pace of euros, dow n by 20.5%. The trend investment and the partner - is improving since the EBITDA ship with Bouygues Telecom decline was limited to 16.3 % in R will enable it to save on cer - the second quarter. SFR slightly D S O tain costs and further invest in revised its 2013 EBITDA outlook T O H very high-speed networks. In following the adverse decision P the mobile segment, the oper - of the EU Court of Justice con - For the full year, Canal+ Group ator is continuing to deploy its cerning the “Copé tax”. 2013 slightly revised its 2013 EBITA 4G network with a target cov - EBITDA is expected to be around T R V outlook to approximately €650 erage rate for 4G and Dual F €2.8 billion, with Capex esti - G S O O T million excluding transition Carrier (LTE and DCHSPA+) of T mates unchanged at about €1.6 O O H H I P costs. I 70% of the French population P billion. 3 4 EXCLUSIVE NEGOTIATIONS OVER MAROC TELECOM As a result of its new strategic directions, Vivendi has entered into exclusive negotiations with Etisalat to sell its 53% stake in the Maroc Telecom group. The UAE operator’s offer would result in disposal proceeds in cash for Vivendi of €4.2 billion, including €310 million for the 2012 dividend. The deal would be based on an enterprise value of €4.5 billion, a multiple of 6.2 times EBITDA. In the same sector, G M U operators in emerging countries are trading at a me - O T dian of 4.9 times EBITDA and European operators at O H P 3.9 times.