Vodafone considers taking full control of Vizzavi

The mobile phone operator Vodafone yesterday confirmed it was considering taking full control of its internet content business Vizzavi by buying out its partner in that venture, the troubled French company Vivendi Universal.

Vodafone and Vivendi, which have sunk about€1bn (£639m) into Vizzavi since launching it just over two years ago, said they were holding discussions about the venture's future shareholder structure.

Furthermore, they said those talks could lead to Vodafone, which owns half of Vizzavi, making an offer for all or some of Vivendi's 50 per cent stake.

Vodafone, run by the chief executive Sir Christopher Gent, is thought to be considering paying up to €150m for all of Vivendi's shares although a deal is not expected to emerge this week.

The London-based Vizzavi, which recently sponsored the Pop Idol television programme, provides services such as news, sports updates and games over mobile phones and the internet.

Despite the hefty costs associated with funding the venture, Vodafone is thought to remain committed to Vizzavi and is not considering shutting it down if a deal goes through.

"In our view, Vodafone's purchase of Vizzavi would mainly be a move to protect previous investment and services already launched in several countries," analysts at Exane said.

While Vodafone said yesterday that certain filings were being made with competition authorities in various countries as a result of the talks, it stressed that did not "indicate the conclusion" of the discussions.

The talks come just days after debt-laden Vivendi said it would not sink any more money into Vizzavi as part of a plan to save cash as it embarks on a major corporate restructuring.

They also come eight months after Vizzavi unveiled its own restructuring programme which saw it axe 100 jobs, reducing its workforce to 700, and part company with the chief executive Evan Newmark.

The loss-making company also overhauled its business model, rehashing the way it charges for the content it delivers to its 7.5 million subscribers. Vodafone and Vivendi said then they remained confident Vizzavi would achieve its target of breaking even by the end of next year.