By Ruth Bender
PARIS—French entertainment to telecom conglomerate Vivendi /zigman2/quotes/202179234/delayed FR:VIV -0.37% SA Monday confirmed its full-year targets as strong growth in videogames and Brazilian telecom operator GVT offset slowing growth at French telecoms operator SFR in the third quarter.
The Paris-based company said it still expects growth in adjusted earnings before interest and tax, or EBIT, this year and a higher adjusted profit than that recorded in 2009, driven chiefly by strong growth at videogames giant Activision Blizzard /zigman2/quotes/200717283/composite ATVI +30.13% Inc. and recently acquired Brazilian fixed-line operator GVT.
Net profit, however, fell 38% to €372 million ($509.4 million), hit by a €232 million capital loss linked to the sale of the 7.7% stake in NBC Universal. Adjusted profit, which strips out most non-recurring gains and charges, rose 6.7% to €688 million.
SFR, 56% owned by Vivendi, has warned that competition in France will toughen in the second half, due mainly to increasing competition from larger rival France Télécom, which this summer put in place a number of initiatives to improve market share.
"I'm not puzzled by this trend, results for the first nine months are still satisfactory," SFR Chief Financial Officer Pierre Trotot said on a conference call.
Vivendi Chief Financial Officer Philippe Capron also tried to reassure on SFR's performance, saying SFR's Ebitda (earnings before interest, taxes, depreciation and amortization) margin remains "solid" despite regulatory pressure and tougher competition.
Amid tougher competition, SFR, Vivendi's largest contributor to earnings and adjusted profit, spent more this quarter on customer retention.
Regarding Vivendi's long-standing interest in buying out Vodafone Group /zigman2/quotes/202862751/composite VOD +1.82% PLC's 44% stake in French telecom operator SFR, Mr. Capron said there are still no talks going on between the two groups. "We still believe the best time to start any talks will be once we have received the remaining proceeds from the sale of NBC Universal," the CFO said, adding that Vivendi had received "no specific signal" from Vodafone that the sale is imminent.
Vivendi management has said it may use the proceeds from the sale of its stake in NBC Universal to fund such buyouts. In September, Vivendi already received $2 billion for selling part of its NBCU stake. It will receive the rest, $3.8 billion, at the closing of a deal in which current NBCU owner General Electric /zigman2/quotes/208495069/composite GE -0.15% Co. is selling a 51% stake in the company to cable provider Comcast /zigman2/quotes/209472081/composite CMCSA -2.10% Corp.
Mr. Capron said he still expects the deal to close at the end of this year, cautioning, though, that there remains "a slight chance" the sealing of the deal will run into early 2011.
Vivendi—which also owns Universal Music Group, the world's biggest music publisher by sales, French pay-TV company Canal Plus and a majority stake in Maroc Telecom—also reiterated it will pay a dividend of €1.40 a share this year.
Write to Ruth Bender at Ruth.Bender@dowjones.com