UPDATE: Vivendi Confirms 2011 Targets Despite Economic Troubles

French telecom-to-entertainment group Vivendi SA (VIV.FR) Wednesday confirmed its full-year guidance as strong second-quarter growth at its video games and Brazilian telecoms units continued to offset weakness in the company's French telecoms business.

"Despite the turbulent economic and financial environment, our operational indicators are increasing. We confirm our full year outlook for adjusted net income above EUR3 billion, and for an increase in the dividend," Chief Executive Jean-Bernard Levy said in a statement.

The CEO urged caution amid heightened concerns over the global economy but said that so far he has seen no signs of a slowdown in business. Still, the company will not decide on the level of its dividend increase until the end of the year, the CEO added.

Vivendi said net profit rose 23% to EUR824 million in the second quarter while adjusted profit rose 12% to EUR884 million, driven by the settlement of a legal dispute in Poland as well as a tax advantage linked to Vivendi acquiring full control of telecoms group SFR.

Adjusted earnings before interest and taxes, a closely watched figure that excludes non-recurring items, rose 0.3% to EUR1.66 billion in the quarter, beating analysts' forecast, as a surge in profit at video-games maker Activision Blizzard Inc. (ATVI) and Brazilian telecoms unit GVT offset weakness at SFR and Maroc Telecom (IAM.CL), in which Vivendi owns a majority stake.

Revenue rose 0.2% to EUR7.07 billion, in line with analysts' forecasts.

Vivendi earlier this year acquired the 44% stake SFR it didn't already own from Vodafone Group PLC (VOD) for EUR7.95 billion. However, SFR is struggling amid heightened competition in the French telecoms market ahead of the launch of Iliad SA's (ILD.FR) Free brand. SFR's adjusted EBIT dropped 8% in the second quarter.

Levy declined to comment on recent press reports that the group may be interested in acquiring all or part of Polish broadcaster TVN SA. "We never comment on any particular rumor," Levy said, but added that the company is "very attentive" to what is happening in Poland as it already has operations there.

The CEO also said Vivendi has had no contact with Lagardere SCA (MMB.FR) over the past few quarters regarding its stake in French pay TV company Canal Plus France. Vivendi has long been interested in buying the 20% it doesn't already own in the company but Lagardere was planning to launch an initial public offering for the stake, before it postponed the plans in the spring amid worsening market conditions.

Vivendi shares closed Tuesday at EUR16.18.

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