Vivendi: Solid First Half 2009

• Increased Market Share for SFR
• Strongly Improved Economic Performance from Canal+ Group
• 2009 Outlook Confirmed

• Press Release
• Source: Vivendi
• On 2:35 am EDT, Tuesday September 1, 2009

PARIS--(BUSINESS WIRE)--Regulatory News:

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Note : This press release contains unaudited consolidated earnings established under IFRS

• Revenues: €13.178 billion, up 17% compared to first half 2008.
• EBITA¹: €2.899 billion, up 12.9%.
• Adjusted Net Income: €1.467 billion, a 0.9% increase (+8.1% for the second quarter). Smaller growth of Adjusted Net Income is due to an increase in interest expenses and minority interests.
• 2009 Outlook: EBITA strong growth confirmed.

Comments by Jean-Bernard Lévy, CEO of Vivendi: "Vivendi delivered a very solid performance in the first half of 2009 in a tough environment. The Group is successfully weathering the current economic slowdown, which is having a real but limited impact. Vivendi is unique thanks to its subscription-based model, leadership in its markets and high-quality, innovative, creative products and services. Our businesses are young and enjoy substantial growth opportunities due notably to the digital revolution.

In the first half 2009, SFR increased its market share in the fixed/ Internet and mobile segments. Canal+ Group has significantly improved its economic performance. Activision Blizzard delivered outstanding results in a challenging market. These achievements reflect the success of Vivendi’s strategic choices.

We continue to invest and innovate in order to respond to changing consumer demands in an environment of rapid technological advances. At the same time, current economic conditions reinforce the need for strict cost control. Our constant priority is to continue to maximize shareholder interest and to maintain the dividend at a high level.

I confirm the 2009 full-year target in current conditions: strong EBITA growth.”

Vivendi’s Business Units: Comments on First Half 2009 Revenues and EBITA

Activision Blizzard

Activision Blizzard² reported better than expected results driven by Call of Duty and Guitar Hero franchises as well as World of Warcraft. During a challenging economic climate, Activision Blizzard was the #1 U.S. third-party console and handheld publisher³. For the first half of 2009, Activision Blizzard had two of the top-five best-selling titles in the U.S.A and Europe – Guitar Hero World Tour and Call of Duty: World at War.

In IFRS, Activision Blizzard’s revenues were €1,493 million and EBITA was €373 million. EBITA notably includes the positive impact of the change in deferred margin which amounted to €245 million ($331 million). As of June 30, 2009, the deferred margin stock amounted to €261 million.

For the 2009 calendar year on a non-GAAP basis⁴, Activision Blizzard is re-affirming its earnings per diluted share outlook of $0.63 but has adjusted its outlook for net revenues from $4.8 billion to $4.5 billion. Revenue guidance was modified as a result of moving the anticipated releases of Singularity and StarCraft II to 2010 in addition to lower market expectations. However, the revenues will be offset in part by stronger-than-expected performance of a few higher margin titles, as well as online revenues, better than expected synergy savings, and a lower effective tax rate.

Before the end of the year, Activision Blizzard will release its strongest video game slate ever based on some of the industry’s most successful franchises, including Infinity Ward’s Call of Duty: Modern Warfare 2, Guitar Hero 5, DJ Hero, Band Hero and Tony Hawk: RIDE.

On July 31, 2009, Activision Blizzard’s Board of Directors authorized an increase of $250 million to the company’s stock repurchase program bringing the total to $1.25 billion. As of June 30, 2009, Activision Blizzard had purchased approximately 64 million shares ($668 million) in total and Vivendi had a 56.06% non-diluted ownership interest in Activision Blizzard.

Universal Music Group

Universal Music Group’s revenues of €2,009 million declined 1.7% compared to the same period last year. A 29% growth in digital sales and higher merchandising and music publishing activity was offset by falling demand for physical product and lower licensing income. Recorded music best sellers included new releases from U2, Eminem and Black Eyed Peas as well as Lady Gaga’s debut album.

Universal Music Group’s EBITA of €211 million, an 18.5% decrease compared to the same period last year, with lower recorded music revenues and an unfavorable sales mix, notably a decline in licensing income including copyright settlements, more than offsetting growth in music publishing and contributions from new business initiatives in addition to cost savings. EBITA was also impacted by restructuring costs of €37 million associated with the ongoing reorganization, while last year included certain copyright settlements and the receipt of equity in MySpace Music venture and benefited from credits from the downward valuation of compensation schemes linked to equity value.

UMG continued its expansion beyond the traditional recorded music business in the period. Agreements were reached with YouTube to launch a music video service (“VEVO”) and with Formula One to organize “F1 Rocks”, a series of concerts. UMG acquired Frank Sinatra’s international catalogue rights. Bravado, UMG’s merchandising arm, entered into agreements with the Rolling Stones and the Michael Jackson estate.

SFR

SFR’s revenues increased by 16.1% to €6,140 million compared to the same period in 2008, due to the consolidation of Neuf Cegetel since April 15, 2008. On a comparable basis⁵, SFR’s revenues decreased by 0.3%.

Mobile revenues⁶ amounted to €4,442 million, a 0.6% increase compared to the same period in 2008. Mobile service revenues⁷ increased by 0.5% to €4,250 million. This improvement was due to the growth in the customer base and data revenues (+34% compared to the same period in 2008 due to unlimited SMS and MMS offers and mobile Internet development for the mass market and the Enterprise segment). However, the roaming traffic and out of bundle usage decreased, reflecting the impact of the economic slowdown on SFR’s results. For the first half of 2009, SFR has strengthened its market share, adding 559,000 new net mobile customers⁸. This represents a 61% market share of net adds. In addition, SFR improved its customer mix (+1.8 percentage point year-on-year to reach 69.5%), adding 466,000 new postpaid customers in the first half of 2009, achieving a total of 14.048 million postpaid customers by the end of June 2009. Moreover, the launch of the iPhone was a great success with 225,000 units sold in less than three months.

Broadband Internet and fixed revenues⁶ reached €1,865 million, decreasing by 3.6% on a comparable basis compared to the same period in 2008. Excluding the impacts of the decrease in switched voice revenues, regulatory changes and the sale of assets of Club Internet network, broadband Internet and fixed revenues increased by 4.5%. After a very strong first quarter 2009, SFR continued to perform well during the second quarter of 2009, obtaining 112,000 new net broadband Internet active customers, resulting in 275,000 new net broadband Internet active customers over the first six months of the year. At the end of June 2009, SFR broadband Internet customer base increased by 11.3% on a comparable basis compared to the same period in 2008 and totaled 4.154 million customers. In the Enterprise market, SFR had 169,000 data links connected to the SFR network (+10.5% on a comparable basis compared to June 2008).

SFR’s EBITDA amounted to €1,983 million, down by €151 million on a comparable basis. SFR’s EBITDA included the surtax created by the French government to finance the state-owned audiovisual sector reform.

SFR’s mobile EBITDA decreased by €110 million year-on-year to €1,677 million. This decline was due to the 1.8 percentage point increase in customer acquisition and retention costs (gross adds and the launch of the iPhone) and the increase in variable fees and interconnection costs due to widespread use of unlimited voice, data and email offers.

SFR’s broadband Internet and fixed EBITDA, including Neuf Cegetel operations since April 15, 2008, decreased by €41 million on a comparable basis to €306 million. The positive effects of mass market ADSL growth and the stable results of Enterprise and Wholesale segments in a difficult economic environment were more than offset by the increase in customer acquisition and retention costs, by the decline in switched voice revenues and by the impact of the sale of assets of Club Internet network in the first half of 2008.

EBITA amounted to €1,296 million, decreasing by €112 million on a comparable basis, compared to the same period in 2008.

Maroc Telecom Group

Maroc Telecom Group’s revenues were €1,305 million, up 4.1% compared to the same period in 2008 (+ 2.0% at constant currency). Against the backdrop of a more challenging economic climate, the key factors driving revenue growth were Maroc Telecom’s continued leadership on its domestic market and the solid operating performances of its subsidiaries in Mauritania, Burkina Faso and Gabon.

Maroc Telecom Group’s EBITA amounted to €586 million, a slight increase of 0.3% year on year (down 1.8% at constant currency). In spite of profit margin gains across the Group’s subsidiaries, the EBITA evolution was impacted by increases in promotional initiatives in Morocco that were required to bolster market growth as well as network development which led to increases in maintenance costs and in amortization and depreciation.

Canal+ Group

Canal+ Group revenues at the end of June 2009 were €2,258 million, a 1.9% increase at constant currency and 0.2% in actual currency.

Over the past twelve months, Canal+ France’s net subscription growth continued to be impacted by the portfolio change of scope carried out in 2008. Excluding this adjustment, net portfolio growth was +94,000 subscriptions year-on-year, which represented an improvement compared with first quarter (+75,000 year-on-year at March 31, 2009). This trend is expected to continue to the end of the year, despite the continued slowdown in the economy. Subscriber growth is notably driven by strong Canal+ and CanalSat performances in territories operated by Canal Overseas (French overseas territories and Africa, including North Africa countries). The June announcement of the pay-TV launch operations in Vietnam is expected to strengthen Canal+ Group’s growth potential outside France.

In addition, migration of analog subscribers was accelerated over the past six months with nearly 240,000 upgrades to digital since January 2009, ahead of targets.

Regarding the group’s other operations, Canal+ in Poland continues to post strong net additions (more than 290,000 extra subscribers year-on-year), and StudioCanal is benefiting from the integration of German affiliate Kinowelt and successful movie releases (Coco, Le Code a Changé,…).

Canal+ Group EBITA grew strongly to reach €472 million, a +€121 million year-on-year increase compared to the same period in 2008 (+34.5%).

EBITA growth was driven by the pay-TV operations of Canal+ France due to the continued benefits of TPS merger synergies, both on distribution and programming costs (new French “Ligue 1” contract). In addition, nearly 300,000 customers subscribed for premium options (HD, multi-room, PVR, etc.) and contributed to the improved results.

Comments on Vivendi‘s First Half 2009 Key Financial Indicators

Revenues were €13,178 million, compared to €11,268 million for the first half of 2008, an increase of 17.0%, or 15.0% at constant currency.

EBITA was €2,899 million, compared to €2,567 million for the first half of 2008, an increase of 12.9%, or 10.7% at constant currency. This increase primarily reflected the improved performance by Activision Blizzard (+€281 million, including the impact of consolidation of Activision from July 10, 2008) and by Canal+ Group (+€121 million).

Income from equity affiliates was €71 million, compared to €135 million for the first half of 2008. Vivendi’s share of income earned by NBC Universal was €72 million, compared to €118 million for the first half of 2008. In addition, for the period of January 1 to April 14, 2008, Vivendi’s share of income from Neuf Cegetel (fully consolidated by SFR from April 15, 2008) was €18 million.

Interest was an expense of €220 million, compared to €134 million for the first half of 2008. This increase (€86 million) was mainly due to the increase in average outstanding borrowings, primarily resulting from the latest acquisitions.

Provision for income taxes reported to adjusted net income reduced by €186 million to €288 million, due notably, and as expected, to the use by SFR of Neuf Cegetel tax losses.

Adjusted net income attributable to minority interests amounted to €998 million, compared to €644 million for the first half of 2008. This €354 million increase was mainly due to the appearance of minority interests in the video games activity, the increase in contribution of Canal+ Group and Maroc Telecom Group and to the share attributable to minority interests for the first half of 2009 in the current tax savings realized by SFR (€171 million) as a result of the use by SFR of Neuf Cegetel tax losses.

Adjusted net income was €1,467 million, or €1.25 per share, compared to €1,454 million, or €1.25 per share for the first half of 2008.

Earnings attributable to equity holders of the parent amounted to €1,188 million, or €1.01 per share, compared to €1,222 million, or €1.05 per share, for the first half of 2008, reflecting a decrease of 2.8%.

About Vivendi

A world leader in communications and entertainment, Vivendi controls Activision Blizzard (#1 in video games worldwide), Universal Music Group (#1 in music worldwide), SFR (#2 in mobile and fixed telecom in France), Maroc Telecom Group (#1 in mobile and fixed telecom in Morocco), Canal+ Group (#1 in pay-TV in France) and owns 20% of NBCU (leading U.S. media and entertainment group).

In 2008, Vivendi achieved revenues of €25.4 billion and adjusted net income of €2.7 billion. With operations in 77 countries, the Group has about 43,000 employees. www.vivendi.com

Important disclaimer

This press release contains forward-looking statements with respect to the financial condition, results of operations, business, strategy, plans and outlook of Vivendi. Although Vivendi believes that such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control, including, but not limited to the risks described in the documents Vivendi filed with the Autorité des Marchés Financiers (French securities regulator) and which are also available in English on our web site (www.vivendi.com). Investors and security holders may obtain a free copy of documents filed by Vivendi with the Autorité des Marchés Financiers at www.amf-france.org, or directly from Vivendi. The present forward-looking statements are made as of the date of the present press release and Vivendi disclaims any intention or obligation to provide, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

¹ For the definition of adjusted earnings before interest and income taxes, see appendix I.

² On July 9, 2008, a wholly-owned subsidiary of Activision merged with and into Vivendi Games and hence, Vivendi Games became a wholly-owned subsidiary of Activision, which was renamed Activision Blizzard.

³ According to the NPD Group, Charttrack and GFk.

⁴ For the definition of non-GAAP basis, please refer to the Appendix of Vivendi’s Financial Report.

⁵ Comparable basis mainly illustrates the full consolidation of Neuf Cegetel (excluding Edition and International parts of Jet Multimedia) as if this acquisition had taken place on January 1, 2008.

⁶ Mobile revenues and broadband Internet and fixed revenues correspond to revenues before elimination of intersegment operations within SFR.

⁷ Mobile service revenues correspond to mobile revenues excluding revenues from net equipment sales.

⁸ SFR including Debitel and Neuf Mobile offers clients (438,000 added in SFR customer base at the end of June 2008) and excluding wholesale customer total base. Wholesale customer base can be estimated at 983,000 at the end of June 2009.

In millions of euros, per share amounts in euros.

For any additional information, please refer to “2009 Half-Year Financial Report”, which will be released on line later.

(*) EBITA corresponds to EBIT excluding amortization and impairment losses of intangible assets acquired through business combinations.(**) A reconciliation of earnings, attributable to equity holders of the parent to adjusted net income is presented in the Appendix IV.

In millions of euros, per share amounts in euros.

na: not applicable

Activision Blizzard: On July 9, 2008, a wholly-owned subsidiary of Activision merged with and into Vivendi Games and hence, Vivendi Games became a wholly-owned subsidiary of Activision, which was renamed Activision Blizzard. On that date, Vivendi held a 54.47% (non-diluted) controlling interest in Activision Blizzard. From an accounting perspective, Vivendi Games is deemed the acquirer of Activision, hence the figures reported correspond to: (a) Vivendi Games' historical figures from January 1 to July 9, 2008; and (b) the combined business operations of Activision and Vivendi Games from July 10, 2008.

APPENDIX IV

VIVENDI

reconciliation of EARNINGS attributable to equity holders of the parent to adjusted net income

(IFRS, unaudited)

Vivendi considers adjusted net income, a non-GAAP measure, as a relevant indicator of the Group’s operating and financial performance. Vivendi Management uses adjusted net income, because it provides a better illustration of the performance from continuing operations by excluding most non-recurring and non-operating items.

(*) As reported in the Consolidated Statement of Earnings.

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