Vivendi’s quarterly numbers impressed the market, beating forecasts.
Vivendi reported €4,022 million of revenue in Q3/2020, 3.4 per cent ahead of ahead of Deutsche Bank’s estimates and the median Zone Finance consensus (with a range of €3,775m – €3,939m). Group organic growth returned in positive territory to 0.7 per cent Y-o-Y in Q3.
“Within the mix, UMG and Canal+ performed particularly better than we expected,” said Deutsche Bank. “The strong organic growth at UMG was mostly driven by music subscriptions and streaming, up 22.6 per cent in Q2 that is more than what reported in the previous four quarters. During the call, we think management sounded confident about music momentum in Q4 but visibility is still low at this stage. After renewing agreements with Spotify and TME, UMG is in talks for new deals with TikTok and other providers of innovative ways to consume music and these could support growth next year.”
Investment bank Jefferies, in its analysis, also focuses on Canal Plus and its recovery in France and returning growth in Canal’s international markets. “Mainland France recovered to -0.4 percent Y-o-Y (Q2: -3.5 per cent; Q1: -0.7 per cent), with management still referring to a weakened advertising market. Mainland subs are stable at 8.6 million (Q2: 8.6 million; Q3’19: 8.4 million). International rev +2.6 per cent Y-o-Y (Q2: +1.7 per cent; Q1: +8.7 per cent) after integrating M7 and launching in Myanmar.”
The bank reminds that on October 5th, Canal+ announced it had built a 6.5 per cent stake in the South African pay-TV company MultiChoice Group. “Management commented that it is a friendly move, and a long-term financial investment based on the valuation and view on growth prospects in Africa. The company did not comment on recent media reports linking Canal+ to Mediapro’s Ligue 1 & 2 football rights,” added Jefferies.
Exane/BNPP expressed similar favourable comments, saying that Vivendi’s Q3 was healthy, “with streaming rebounding ahead of the UMG 2022 Initial Public Offering. Indeed, the UMG division received considerable praise. “Music delivered materially ahead of expectations with +6 per cent organic revenue growth vs consensus at 0 per cent. Within the segment, streaming delivered strongly at +23 per cent (vs +9 per cent in Q2), with management emphasising no one-off boosts during the call, rather good momentum in subscription and advertising streaming and a strong release schedule.”
As to the IPO for UMG analysts confirm that Vivendi has expedited the time-table and is now targeting a 2022 IPO.
“The group is also ‘pursuing’ plans to sell additional minority interests in the group, alongside the Tencent option for a further 10 per cent, which management argued was unaffected by Tencent’s recent US regulatory issues,” said Exane/BNPP.