Fitch revises Vivendi view to negative

Fitch Ratings said it revised Vivendi SE’s outlook to negative from stable and affirmed the BBB issuer and senior unsecured ratings.

“The revision of the outlook is driven by the company’s planned disposal of a 60% stake in Universal Music Group (UMG), the largest contributor to Vivendi’s EBITA. The disposal in 2021 will be via a payment of dividends in kind. The remaining portfolio will be skewed towards less profitable, more cyclical businesses and is likely to increase volatility of revenues and weaken cash flow generation,” Fitch said in a press release.

After the disposal, the agency noted that Canal+ and Havas will be the main contributors to its revenue and EBITA, making Vivendi less diversified. The transfer will cut EBITA to around €500 million from about €1.6 billion in 2020.

However, net debt will fall to €3 billion from €5 billion at the end of 2020 from the sale of a further 10% stake in UMG to Tencent and the €1.9 billion transfer of net debt to UMG as part of the disposal process, Fitch said.

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