CORRECT: Vivendi Net Profit Surges, Keeps 2011 Goal

French media-to-telecoms conglomerate Vivendi SA (VIV.FR) Thursday said first-quarter earnings rose even tough competition and a recent tax change weighed on telecom operator SFR, and confirmed its full-year guidance.

The Paris-based group said first quarter net profit surged in the first three months of the year to EUR1.73 billion form EUR589 million last year, boosted by a EUR1.26 billion settlement from the end of a legal battle in Poland. The Polish settlement offset a capital loss linked to the sale of Vivendi's remaining stake in NBC Universal, which was mainly due to a EUR477 million foreign exchange loss due to the decline of the U.S. dollar since January 2004, Vivendi said.

Revenue rose 3.8% to EUR7.18 billion in the quarter, above analysts' forecasts for revenue of EUR7.03 billion, helped by strong sakes at video-games unit Activision Blizzard Inc. (ATVI) and Brazilian telecom operator GVT.

Adjusted earnings before interest and taxes, a closely watched figure that excludes charges relating to acquisitions and mergers, also rose 7.2% to EUR1.71 billion in the first quarter, as gains at Activision and GVT offset a drop in profits at SFR as well as Universal Music Group. The figure also topped analysts' expectations.

Vivendi last month agreed to buy out Vodafone Group PLC's (VOD) stake in SFR for EUR7.95 billion, giving the French company full control of its biggest cash generator. However, SFR faces increased competition in the French telecoms market, where operators are preparing for the arrival of fourth mobile operator Iliad SA's (ILD.FR) Free Mobile next year and had to face an increase in value added tax at the start of the year.

Despite difficulties at SFR, Vivendi said it still expects adjusted profit to grow slightly this year, counting on strong growth at its Brazilian telecoms unit GVT to offset weakness at SFR.

Vivendi also said that it expects adjusted profit to be higher than EUR3 billion this year and its dividend to increase after buying 100% of SFR, a deal which is due to close by the end of the second quarter.

Vivendi shares Thursday closed at EUR19.11.

-By Ruth Bender, Dow Jones Newswires; [phone]; [e-mail]