Fitch affirms Vivendi

Fitch Ratings said it affirmed Vivendi SA's long-term issuer default rating and senior rating at BBB following its agreement to acquire EMI's recorded music business. The outlook on the long-term issuer default rating is stable.

"Vivendi's acquisition of EMI's recorded music business is underpinned by the potential cost synergies, but regulatory and execution risks are significant," Damien Chew, senior director in Fitch's European telecoms, media and technology team, said in an agency news release. "The increased exposure to the music industry, which is still facing challenging structural shifts, comes at a time when some of its core telecoms businesses are meeting increased competitive pressure and the group's financial headroom is already limited."

Fitch said it recognizes Vivendi's track record in acquisitions and the financial discipline management has shown in the past. Vivendi's rating would come under pressure if there is no sign of deleveraging in 2013 and if there was no clear expectation of medium-term leverage heading back to below 2.5 times, the agency said.

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