Vivendi SE (VIV) Earnings Call Transcript & Summary

Good evening, everyone, and welcome to the Vivendi H1 2022 Earnings Presentation. This conference call will be hosted by Mr. Arnaud de Puyfontaine, Chairman of the Management Board and CEO; and Mr. François Laroze, Member of the Management Board and CFO. As a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Arnaud de Puyfontaine. Please, sir, go ahead. Your line is open.

Thank you very much, and hello, everyone. Welcome, and thank you for joining us for the Vivendi 2022 First Half Earnings Presentation. Before starting the call, I would like to warmly welcome François Laroze. François was appointed as Vivendi's CFO last month, and he's simultaneously serving as Chief Financial Officer at Havas. While some of you already know him, you will now have the opportunity to know him even better. Welcome on board, François. Let me also take the opportunity to sincerely thank Hervé Philippe for his dedication and great contribution to Vivendi. He has been a fantastic partner over the past 8 years. I'm particularly happy to continue working with him on several projects. As you know, François appointment is part of a revamping of our management team. We have put in place a new management board and a newly created Executive Committee. Their members have all been promoted from within Vivendi, highlighting the group's exceptional talent pool. We wanted our new management team to better reflect the great diversity of expertise in the group and to better integrate the businesses into our governance by appointing representatives for all our entities. This new team is committed to giving new impetus to our strategic project, which is built on 3 main pillars. First pillar, transformation. All our businesses need to adapt to a fast-moving competitive environment, rapid changes in consumptions and new emerging technologies. All of them, without exception, are already fully engaged in major transformation projects. Look at how Canal+ has transformed myCanal into the leading TV app in France and now deployed in 30 countries in Europe and Africa. Look at Prisma Media, how Prisma Media has successfully undergone its digital transformation, allowing brands to reach new audiences. For example, Gala has become the European media leader on TikTok. By transformation, I'm not only referring to commercial business. I also mean a profound shift towards a more sustainable model in terms of environment and society. Second pillar, internationalization. We are witnessing global consolidation movements in the media industry. If we want to compete with major players, we must build scale to reach a critical size. That's why we strongly support our businesses in their international developments. Havas and Canal already generate 80% and 40% of their revenues, respectively, outside of France. We have strong development ambitions for each of our sectors. Third pillar, integration. Vivendi is home to the most prestigious brands in complementary sectors of the cultural and creative industries, which are already working together. This is what makes us stand out from the competition. In recent months, many joint projects have been launched between our entities. Let me give you just one example. A famous Editis book by Marc Levy, Toutes ces choses qu'on ne s'est pas dites, has just been adapted into our Canal+ series. Other such initiatives are in the pipeline. Creating more value together is at the core of what we do at Vivendi. This strategy has already proven to be successful. We have delivered good results in the first half of 2022. Our revenue improved by almost 11%. And as reflected in the 31.5% increase in EBITA, our businesses continued to show very strong resilience. The Canal+ Group continued its international development and strengthened its content offering, notably, by winning 100% of UEFA European competition and securing other major sports rights over the long term. I also want to emphasize the remarkable performance of Havas Group. François will give you more details in a few minutes. Looking ahead, we will accelerate our development as a global leader in media, content and communications. In the coming months, we will move forward with the proposed takeover of the Lagardère Group. Vivendi now holds around 57% of the group's share capital following its friendly public tender offer and 22.45% of the voting rights pending approval of the takeover of Lagardère by the competition authorities. To avoid any potential antitrust problems due to its combination with Lagardère Group, Vivendi will examine a proposed disposal of 100% of its subsidiary Editis. This proposed transaction would be mainly executed through the distribution of Editis shares to Vivendi's shareholders and the simultaneous admission to trading on Euronext Paris. Of course, to be implemented if applicable, this plan must be authorized by the European Commission and be subject to the information and consultation procedure involving the relevant employee representative bodies. The Bolloré Group, Vivendi's principal shareholder, would sell all of the Editis shares it would receive in the distribution so that Editis would have a stable core shareholder base. The disposal of Editis would clearly be a sacrifice for us. Yet, the project we will explore with enable Editis to preserve its integrity and autonomy while benefiting from solid growth opportunities. As already expressed, this project with Lagardère is an integral part of our strategic worldwide ambition. Another topic I wanted to mention is Telecom Italia. The company is facing numerous strategic and financial challenges. We have already expressed our views on the plan presented by Pietro Labriola in March. It's Amministratore Delegato, based on the creation of separated entities and the sale of the network. As you have read, we are determined to ensure adequate valuation levels that accurately reflect the true value on this asset. Otherwise, we will consider other options. What we know for sure is that we are staying true to our commitment to promote a constructive dialogue in the best interest of team and its stakeholders, bringing the added value of our industrial shareholder position within the company. Italy is definitely a key country for Vivendi. As you can see, we are heading into busy and exciting times. As for the general context, we don't yet know what the next months will look like in Europe and globally. The macroeconomic and geopolitical environment is uncertain, to say the least. That's why despite our good results, we remain cautious, but our group is well positioned to weather a potentially less favorable second half. We are confident in our fundamentals: a clear strategic vision coupled with great operational agility; our operations' ability to invest in quality content to attract and develop the best talent; the complementarity of our business and the robustness of our business model; and a long-term vision thanks to our principal shareholder, the Bolloré Group. We have all it takes to stay the course. All Vivendi employees around the globe are fully playing their part in rolling out our ambition development project in culture and creation, business transformation and value creation for all stakeholders. Thank you for your attention. Let me now hand things over to François.

Thank you, Arnaud. Thank you for your nice words. I'm very proud to start this new journey as a member of Vivendi Management Board. I'm also happy to come back in the field of game of listed group that I have known as Havas' CFO until 2017. I saw in the list of attendance some first name I'm used to working with: Lisa, Adrien, Julien, Jérôme, some other, Conor. And I'm very happy to interact with you again and looking forward to meeting all the other very soon. So let me walk you through the Vivendi first half results, starting by the key figures. I'll tell you that the revenues of the first half went up by 10.9% compared with 2021 at EUR 4.8 billion. Our EBITA went up by 31.5% to EUR 412 million. The net result is up by 0.5% compared with last year at EUR 488 million. The CFFO is very solid as well at EUR 333 million, 13.8% above last year. And we have a net debt of EUR 776 million at the end of the first half, on which I will come back. In the detailed P&L, you will see all the results. I would like just to point out 2 important one-off impacts that we have had on the first half. The first one is on Telecom Italia, on which we have computed a loss of EUR 235 million, reflecting the result of the Q4 2021 and the Q1 2022. This is a loss of the company for which we have taken our share. The second important one-off impact is the Banijay-Financière Lov Entertainment, FLE, operation by which we have made a capital gain of EUR 526 million, moving our stake in Banijay of 32% to a 19% stake in the new listed FLE company. These 2 major items explain part of the net result evolution. If we move to balance sheet, you see that we have a very solid balance sheet with a EUR 19.2 billion equity, net debt of EUR 776 million at the end of the first half. Let's spend a few minutes on our financial asset portfolio. You will see that Universal is still at 10% of share capital; TIM, 17%; Lagardère, after the takeover, up to 57.35% of Vivendi [ retention ]; and this new line of Financière Lov Entertainment, FLE, at almost 20%, 19.9% of share capital. MultiChoice, the South African-based TV operation, we get -- we saw our stake moving to 20.1%. We have crossed the threshold of 20% right after the 30th of June, early July, on the 7th of July. Telefonica, PRISA and MFE Mediaset, no major change in these stakes. If we go to the net debt evolution. As I said, we are moving from a net positive cash of EUR 340 million at the end of last year to net debt of almost EUR 0.8 billion at the end of the first half. You will see in the bridge that we have returned EUR 0.6 billion to the shareholders through dividends of EUR 0.3 billion and share buyback for the same amount of EUR 300 million. We have acquired the Lagardère share for almost EUR 400 million, representing the 12% of the first part of the takeover bid. We have spent EUR 0.4 million in different investments, mainly, in Canal+ with MultiChoice, but also in Havas that have finalized 5 deals among the first half. This investment has been partly paid by the very sound CFFO of our business units, which is up to EUR 0.3 billion during the first half. All these inputs explain this move from positive net cash to this net debt of EUR 0.8 billion. If we move to the operational performance of our main business units, as I said, we have a 10.9% increase of our revenues. It's 5% -- 5.5% inorganic, and interesting to know that Canal+ with 3.3% is still growing at a good pace. Havas has done a very high performance on the first half with 19.9% of gross revenue, 11.8% inorganic, which is a very good performance for the first half. And Editis was up -- was down by 7.5%. If we move to EBITA. Same thing again. The main business units are delivering very sound EBITA: Canal+ at EUR 337 million, plus 2.1% compared with last year; Havas, EUR 112 million, plus 27.8% but only 13.6%, which is already high inorganic after some perimeter and FX impact. And at group level, it's 16.9% for the control business, to which we had the income from operational equity affiliates, mainly, UMG and Lagardère, for EUR 46 million, which goes to EUR 412 million total EBITA Vivendi, which is 31.5% ahead of last year. In terms of scope and currency impact, we have disclosed this 10.9% actual increase of the revenue with 5.4% coming from organic, 4.1 coming from consolidation scope, mainly Prisma, that is computed for the first time 6 months during this first half but also other Canal+ acquisition and the Havas one I already disclosed. If we move to the EBITA, the organic is 6.9%. And if we add to this organic the consolidation scope impact of 7.6 and the FX, positive 2.4, we have our 16.9% increase of the EBITA control business. If we enter into the main business unit of the group for Canal+, very sound figures, as I described at 3.3% of revenue increase. Most of the other geographies are delivering very high performance, international TV at 7%, mainly coming from Africa and Western Europe, Eastern and Western Europe. Mainland France, which is very good news as well, is going up by 3.7%. I think that's -- it's for the whole France, and we have a very high level of premium subscriber base, which is growing at a good pace as well. Studiocanal is negative in organic growth, but due to some one-off in 2021 with no impact on the EBITA, which is higher than last year. The CFFO is also a good signal of the very good performance of Canal+ during this first half with a very high level of EUR 519 million for the first half 2022. In terms of subscriber base, we have the same trend, obviously, with 1.5 million subscribers more than last year, 14.3 million in international, 9.6 million on France, all of our geographies going up, Africa, Europe and as I said earlier, France, which has 550,000 in self-distribution and 100,000 in wholesale. Havas Group, very sound performance as well. As I said, 19.8% in net revenue, 11.5% in organic growth, which is at the high loss level of the industry with Omnicom, better with some of our peers. All the geographies are delivering very high performance, Europe, 17%; North America, almost 18%; Asia Pacific and Africa, 27%; and Latin America, which is a smaller region, is delivering 55% of organic. This good performance is due to nice wins in all our business, Havas Health & You, Havas Media and Havas Creative, which have achieved new bids -- record new bids during this first half. The performance in EBITA, which is up by 28% from EUR 87 million to EUR 112 million, is due to the high level of revenue and to the strict cost control that we have applied during the last 2 years. And today, Havas is able to deliver a high level of profitability at 9.3% on the first half. For Editis, we have a revenue of EUR 344 million, which is down by 7.5% compared with last year, with this impact on all our business unit, literature, education and distribution, as you see. Important to say that, first of all, the market of the education has been down during this first half, which explains this trend. Second important thing to say is that Editis is always hit by some seasonality impact and as always, a very higher second half compared with the first one, and that certainly will be the same trend in 2022. Third important thing is to say that if we compare with 2021, we have this negative trend. But 2021 was exceptionally high due to the impact of pandemic. And if we compare with the last reference year before pandemic, which was 2019, we saw that we have a high level of revenue increase at 12.4% and also on all the business units of Editis. In terms of EBITA, due to this evolution of revenue, we are down from EUR 10 million last year to the breakeven for the first half, knowing that to -- in addition to this impact on revenue, we have some negative impact as well on the paper price that hit all the industry, Editis as the other. For the other businesses, Prisma Media, first of all, we see the increase of the revenue, which is due to the scope impact as we have only taken 1 month in 2021 and 6 months this year, which explains the very high increase of the revenue, if we compare organic growth. So without any perimeter impact, the organic, it's 7.4%. The other important evolution is for Vivendi Village moving from EUR 23 million last year to EUR 76 million and is due to the return to normality in our Vivendi Ticketing operation, which explains this very high level of revenue compared with last year. In EBITA, we have a positive trend in most of all these other businesses. Prisma, going up from EUR 4 million to EUR 21 million, including some positive one-off in the agreement we have signed with Google for the neighboring rights. Gameloft, which is down compared with last year with some delays in launch of new games, but again, some -- this delay will have a positive impact on the second half. Village is moving from minus EUR 12 million to minus EUR 3 million due to this return to normality I was referring to in the Ticketing. And New Initiatives are doing better with Dailymotion still making losses but in a very positive trend in both operational KPI and financial results. The corporate is better than last year, mainly due to the positive evolution in some Italian fees we had last year. So as a conclusion, what we could say that we have a very positive performance of all our control business with the main 2 businesses, Canal+ delivering very high level of EBITA during this first half and Havas delivering the biggest part of our growth during this first half in terms of revenues and profitability. Here -- so here is for my presentation and now ready to answer your questions.

[Operator Instructions] The first question is coming from the line of Omar Sheikh from Morgan Stanley.

I have a couple of questions, if I could. Maybe the first one for François. I just wanted to just ask you, François, how cyclical or sensitive to the macroeconomic conditions you expect Canal and Havas to be in the second half of next -- or this year rather and into next? And what are you planning -- what are your planning assumptions in terms of costs for both those businesses? Are there sort of action plans to reduce costs already? Are you -- do you have contingency plans? Maybe you could just talk a little bit about that. And then secondly, maybe one for Arnaud. I just wanted to just ask about the portfolio listed assets. I guess the 2 key things for me are the plans for MultiChoice. So first of all, why did you go to 20%? What are your ultimate ambitions here? And do you think MultiChoice could form part of the second leg that you talked about in your strategy to internationalize Vivendi? And then finally, on UMG, obviously, there's a lockup, I think, ending or so -- ending at the end of September of next year. What are your -- sort of what's your current thinking about how long you want to keep that stake?

Okay. Thank you, Omar. Let's answer your first question concerning this cyclical operation of Canal+ and Havas. The most important thing is to say that today, we have not faced any major impact of the current macro on these 2 businesses. So it's very positive that at the end of the first half, neither Canal+ nor Havas have experienced major evolution in our revenue base during this first half. Nevertheless, we remain extremely cautious because we know that the macro environment should hit us at one time or another. And therefore, we are already ready to adapt our level of revenue, of course, to the level of revenue in case we should be hit by such impact. So today, we are already ready in Canal+ and in Havas to reduce cost as we have done over the last 2 years when facing some headwinds. But important to say that we are ready to face it, but we have not faced it yet.

Just as a complement of François' answer, I would also say that we've got some of the past action are also a base of thinking about how we will navigate in uncertain environment. And this is what we have done during the pandemic in 2020. I think that all our businesses have shown resilience and the capacity to manage the business in turmoil. And I guess that this is the mindset as regard to the way we approach the second half. As regard to MultiChoice, I mean when you see the results of Canal+, I mean, they are powered by the international development, number one. Number two, we said that clearly, the strategic agenda for Canal+ is to grow its subscriber base, and this is one of the priority. And for our businesses at the level of Vivendi, we want to get an acceleration of the internationalization of our different businesses. So MultiChoice is just an illustration of this move. We have a good understanding of the market in which the company operates, and we have confidence in the long-term growth prospects globally on the African continent. So we have exchanges with the management team at MultiChoice, and we are happy about the level of communication and potential common initiative with what is like the mirror of Canal+ in sub-Saharan French-speaking environment in the -- with the English-speaking African continent. And as regard to UMG, you're absolutely right, Omar. We have no preconceived plan as regard to what will happen next after the period until September 2023. And what I can tell you is that we are playing the role of a shareholder at Universal. We have seen the numbers that have been disclosed a couple of days ago at Universal Music Group. We always have been big fan of the management team of Universal Music Group under the leadership of Sir Lucian Grainge, and we look forward to getting progress in the future. We do believe that the dynamic of the music industry are positive. And so we hope and we trust that it's going to be there in the long term. So I can't comment any more about what's going to be our position in due time. Thank you, Omar.

And the next question is coming from the line of Lisa Yang from Goldman Sachs.

I have a few questions, please. So firstly, on the buyback, I noticed it's stopped on June 24 so a bit more than a month ago. When I think of share price, I think, range between EUR 9.3 to EUR 10.1. I think previously, you've been buying stock quite actively below EUR 11. So I'm just wondering what was the main reason behind stopping the buyback? What would make you resume the buyback? And what would you consider an attractive price? Is that below EUR 9? Or any color on that would be helpful. I think the second question is on Canal+. Obviously, there's been some talks about potentially increasing the VAT on the basic packages from 10% to 20%. I'm just wondering if you can give us any update in terms of where we are, when -- what could be the timing of the implementation of the VAT increase? Any sense of the potential -- the likely sort of impact for Canal and how you plan to offset that? And the third question is on Editis. Obviously, the profit was a bit -- was quite low in H1. You mentioned higher paper costs. Just any thoughts in terms of the margin to expect for the full year?

Well, I will start by Editis. You're absolutely right that the numbers are in H1 2022 below 2021. But I would say that 2021 has been an exceptional year post-pandemic, which has given a kind of a push up in terms of the numbers. But if you compare to on a like-for-like basis, comparing apple with apple, and you compare the first half 2019 to the first half of 2022, which is comparing apple with apple, you would see that historically, we have a seasonality in the publishing operation. And in 2019, it was a loss-making operation. So relative to standard results of the publishing industry and the profile of this seasonality, the numbers, despite being below last year for the reasons I just explained are nonetheless better than they used to be in the past, number one. And I would add on top of that, that obviously, Editis has to navigate through a difficult period through the kind of a big push on paper price, which has an impact on the P&L. And the total impact has been EUR 2 million, which represents more or less 0.6 points of margin, at -- so at EBITA level. But also, we have been faced with 3 different factors. Number one, pre-electoral, it's a French business, French-speaking business but with a big chunk of its turnover in France. Pre-electoral period in the publishing -- book publishing industry has always been tougher than in normal years, so number one. And it's been quite intense political agenda in France on the first semester. Second thing is we've seen a dip in consumption on the first -- from 24th of February due to the Ukraine war. And we have seen a very deep dive into the level of people in the different channel of distribution of books, which has impacted the numbers. And last but not least, we also have this inflation environment question mark about consumer purchasing power, which is not helping. So it has been, relative to a normal year, I would say, a sequence. What I can say is the early signs of July are more compelling. I'm happy to report that Editis is #1, 3, 5 in terms of release with Marc Levy, with Franck Thilliez, among others. And that in terms of the back-to-school period, which is called in France [Foreign Language] we have some books in the pipeline, which are pretty compelling. So we expect the second half to be able to not only compensate for the increase of our cost base with the radical management of the company and its cost base, but also to get kind of in the pipe, the launch of some blockbuster, which will help the numbers on the second half.

Okay. Just a word on the buybacks, to answer your question, just to remind you the -- and update you on the current situation. We have today 81 million of shares owned by the group, which were then 7.31% of the capital. We have another 1.8% to acquire in the envelope given by the last general meeting, which is roughly 20 million of share that we could buy in the coming weeks and months. For the time, as you said, we have not acquired any shares since mid-June 2022. But it will depend on the evolution of the stock price in the coming days. We will see, we will adapt ourselves depending on the level of this share price. A word on VAT, which was your second question,. As you know, there have been some announcements by the French tax authority that the VAT for Canal+ should go from 10% to 20%. There are still discussions to see whether this decision is a final one or not. Certainly, we'll have more news in mid-September coming from the question we have raised to the tax authority. We do not know the answer, obviously. In the meantime, we have already warned our clients who are subscribers of the month of September that they may face VAT increase due to this decision of the tax authority. And then month after month, we will decide and will adapt our position to clients, depending on the answer and the questions we'll have from the tax authority.

The next question is coming from the line of Adrien de Saint Hilaire from Bank of America.

François, delighted to be working with you again. So I've got a few questions, please. The first one relates to Canal+ and M&A. There's been a lot of articles in the press recently about some interest in some U.S. assets but also OCS, possibly also in Italy and Spain. So can you just talk to us about like your ambitions in terms of M&A for Canal+? Secondly, just wondering if you could give us some more color on what you would expect for Havas' like-for-like growth in the second half of '22? And the last question is in the release, you mentioned about a distribution of Editis to shareholders. Why not consider selling Editis to a trade buyer?

Thank you, Adrien. So I will start by your last question. Our objective in the exchanges and the different scenario we've been working with over the past few months is to anticipate in the -- our operation and the friendly tender offer on Lagardère, the consequence of the publishing asset in France. In combining the asset, Lagardère publishing operation in France with Editis, we knew from the outset that we would have a problem with the distribution organization. We couldn't merge both. We would have, for the small size, called [ vivo de posh ] problem because with Pocket and with [ vivo de posh ] we will go well above the market share competitive limit. We have an education between the brand [ Daton ] and the brand [ Atie ]. So we knew that there would be some hurdles. But now -- and in terms of our objective from the Vivendi side, but also in terms of having exchanges with our advisers and so on and so forth, we set up -- we put some objective in the remedies. And the remedies were threefold. Number one, we wanted for the remedy to be a sustainable, long-term and flying proposition for the future. So we wanted the remedy to be sustainable from the beginning. Second, to have remedies that would be easy, simple in terms of execution and readable just to help all the process with the competition authority at EEC level. And we didn't want to get a solution that would change the balance within the market on the competitive side. And obviously, keeping in mind that the remedy -- we wanted a remedy to be the best one for all the stakeholders around the situation. So that's the reason why what we have recommended is -- and what we have been given, an authorization from the Supervisory Board, is to manage the process and to check its compliance with 2 things. Number one, the competition EEC authority and also the personal representative in the different part of the business. We wanted a solution to be the best one for all the stakeholders around the situation, Editis, Lagardère and Vivendi. And we also do need to say, we've got a reference shareholder at Vivendi. And in the process, as we announced it, there would be a commitment from the Bolloré Group to dispose its stake within the new Editis, which would be 29.7%, to a referent long-term industrial shareholder to maintain the anchor shareholder base for the future and the implementation of the strategy at Editis in the long run. So -- and sorry, but you gave me, Adrien, the opportunity to be a little bit more specific about the announcement of this evening. But to your question, which is what not to sell to a trade buyer, it's just because what it was is just simply changed the dynamic of the competitive market in France, and it will open a new question that we want to answer quickly. Obviously, we want a fast process. You have seen that the industry, there has been destabilization from some behavior of some competitors in the environment. We have seen a situation which instability is not good when you are talking about more specifically, creative business. So again, it's a very pragmatic approach taking into account all the interest and all the criteria that we have set up, and the options that you have raised was not compliant with our objective. I hope that I have been comprehensive in my first answer. I will then move on to your first question, Adrien, which is about Canal+ M&A strategy. Well, the mandate and the objective on Canal+ is to go from strength to strength in its international development. So I guess that when you see the track record in terms of M&A at Canal+, it's a really good track record. We announced that we wanted to reach the 30 million subscriber threshold by 2025. And I guess that every opportunity of the market, which is matching the strategic agenda of the company, is -- are opportunities that are scrutinized by us. And this is what's currently happening in the different situation that you are referring to. No further information to share with you at this stage, but we are working and we'll see what's going to be -- what are going to be the next steps. Maybe on Havas, do you want to take the question, François?

Yes, on Havas. Swiftly on Havas, it has delivered a very high level of organic growth during the first half, 11.5%. Obviously, on the second half, this -- the pace has reduced a little bit for two reasons. First of all, we have not as good as the first half comp base as we have delivered a double-digit organic growth during the second half of 2021. And the second is, as I said earlier, we should face some headwinds in some of our businesses. So we certainly will be growing again but certainly not at the same pace and confirming a high level of organic for the whole year. We are still, I would say, cautiously optimistic.

The next question is coming from the line of Julien Roch from Barclays.

[Foreign Language] So first question is on Telecom Italia. Arnaud, you said that you were examining in details the plan for the new CEO and that you wanted to maximize value. And if that was not the case, you would consider other options. Can you elaborate? What does that mean? Would you be willing to sell? And actually, my other questions were asked, so I'm only going to have one.

So let's be specific, Telecom Italia has always made the headlines, and we have had a few of them over the past few months and weeks. What I'm referring to is that you have seen Pietro Labriola, the new amministratore delegato, making a presentation about his strategic vision during the Capital Markets Day on the 7th of July. He made then a roadshow to meet with some investors over the past few weeks. And we're going to have the Board on the 3rd of August next week on the H1 results. My comments is the one based on the situation where there's been this kind of MOU signed between Telecom Italia, KKR, Macquarie and Cassa Depositi e Prestiti as regard to a potential option, which is a rete unica. In a rete unica, you will travel broadband at a single network to get the combined operations between Open Fiber, which I do remind everybody that is owned by 60% by Cassa Depositi e Prestiti and by Macquarie, which bought 40% from Enel and Telecom Italia for its network, bearing in mind that Cassa Depositi e Prestiti, the shareholder below the -- close to 10%. So there is this opportunity, which has made all headlines. And we say that Vivendi that as regard to this as a major shareholder of -- a reference shareholder of Telecom Italia, we could see such an operation under a different condition, which is, A, about getting the right value; B, getting the right level of balance sheet for the network and for the remaining part of the business; C, getting the right level of personnel in the different part of the business; and last but not least, getting the right relationship between the ServCooperation and the NetCooperation. So if we were not or if the negotiation were not to be followed by a formal offer that could be receivable at the end of the day, we will back other options, which have been mentioned and developed by Pietro Labriola, which is we have to think about the future of the company where we will be able to manage an infrastructure business on the one hand and do the right job on the consumer side of the business, the B2B side of the business. And we shouldn't forget about the situation of team Brazil, which is a good situation. So we've got an environment where there are different options. You may have seen the approach which had KKR in autumn last year, which was unsolicitated, which was a kind of an approach. You have seen some headlines about CDC potential interest at a certain stage, which was then denied quite recently as regard the potential operation on the ServCo. So you've got many rumors about the situation. The thing that I know is that this business has now a head who is a man who knows about communication business. He has built a team who at last is a team who knows how to run the business. And there is a vision within the current complexity but also diversity and, in my view, potential value creation of the business on the long term. So many options available as regard to the future of Telecom Italia, an absolute focus on creating confidence with shareholders, that is to say, to deliver on what is announced and planned by the management. So it's a question of reliability and trust building, number one. Point number two, it's the capacity to manage cost base efficiencies, to manage the evolution on a very highly competitive market in the consumer side but also to accelerate the growth on the B2B side. You know all the projects about cloud and so on and so forth, that's very important. And at the end of the day, being able to generate a level of cash flow generation to decrease the level of debt because, obviously, one of the problem of the company is the debt level. So that's the reason why I'm referring and I've been a bit long to my answer to your question, Julien. But you were one-question player this evening, so I take the opportunity just to say that it's a long story, but it's still a story that we do believe that can create value. And we are, as the reference shareholder of Telecom Italia, behind the management team to make it work and at last to be in a position to showcase that this company has a value, which is much greater than the current share price. Thank you, Julien.

The next question is coming from the line of Christophe Cherblanc from Societe General.

So I had 2 questions. One was on a clarification on the VAT situation at Canal+. I understand that you said that you would be resetting the prices. But I just want to make clear, is it something you have to -- you can do immediately? Or do you have to wait for the end of the 12- and 24-month subscription? And in that case, what would be the short-term impact in 2022, '23 and possibly '24? You're waiting for the time that the prices are effectively raised? And the second one was on -- Arnaud, I understand you don't want to be too specific on Starz and possibly Lionsgate as we have read in the press. But just as a principle, would you be open to invest a minority stake in that kind of asset, bearing in mind that you were mentioning the successful M&A of Canal+? But they've always taken control of other operations that would not be the case if it was a minority stake?

Okay. On the first question concerning the VAT to make some more information. As I said earlier, we will adapt our VAT rate month by month with the anniversary date being at the end of the contract. So we won't be in a position to change all the VAT if the new rate was to be confirmed. So that's -- that would have an impact on our EBIT, certainly. It's too early to put into figures. So we will wait until the end of the discussion with the tax authority. But certainly, if the rate was confirmed at 20% for all our business, it will impact severely our results. But one more time, nothing can be computed or even forecasted today.

Just on top of what François said, it's also the capacity we have, what is so called cohort of subscription. And as regard to what's going to be the end game, there will be a management of this pricing, which is going to be monitored, cohort after cohort linked to the time span of the subscription life in our customer base. As regard to your second question, Christophe, I guess that yes, there's been a really great track record in terms of acquisition and as we have seen in the past few years. But also, there's been some situation where there has been a minority position and quite successfully operated like, for instance, the minority position in Banijay, then Banijay-Endemol Shine, and the position which is now our position, close to 20% is a newly listed FLE. I mentioned another situation, which is we have crossed the 20% threshold in MultiChoice. In MultiChoice, this is a position just to think about the next step. But we are a happy shareholder receiving dividend from MultiChoice, so it's a good investment. We received EUR 21 million in 2021, for instance. So my condition is that the approach is very pragmatic. It's opened different opportunities. And I guess that a minority is not something that we wouldn't contemplate if we are given all the rationale and all the elements to believe that it's a wise investment in the context of our strategic plan.

And the next question is coming from the line of Richard Eary from UBS.

Just 3 questions. Just firstly, on the buyback. You mentioned on the call that there's still 1.8% left within the current envelope. Can you just talk us through what are the next steps if you actually want to expand that buyback? I presume that's subject to an AGM approval, but just to clarify that as well. The second thing is just on the Editis basically, let's say, institution's distribution. How are you thinking about setting a valuation for that asset? And how do we think about that? And then just thirdly, just on MultiChoice. Can you just refresh us in terms of South African ownership levels? And obviously now, crossing that threshold of 20%, what's next for your consideration in the asset?

Just on the first question, concerning the buyback. Just to confirm that today, we have no other agreement but the 1.8% to which I referred, which is 20 million of shares. So that's the current headroom we got in terms of acquisition in the coming months. Your second question, I'm not understanding so sure to call it. Could you repeat the second question, please?

When you do -- I mean, if you basically end up doing an in-species distribution of Editis, how does the valuation get set on that distribution?

But that's, A, there's going to be a parity as regard to the system. And as we announced, we are going to start to work on the project with advisers, and we'll be able to be more specific in due time. We can't further elaborate at this stage. And as regard to the mechanism for MultiChoice, I mean, this is -- MultiChoice is not under the rule of operation in the context of South African regulation. And I think that we've got to the limit of 25% in the current legal framework environment. But as regard to this very specific and detailed question, I will ask my team just to provide you with further clarity and details later.

The next question is coming from the line of Matt Walker from Credit Suisse.

I've got 2. The first one is, do you think you'll be able to increase the Canal+ EBIT next year because you bought the Champions League and Europa League rights? That's the first question. The second question is on the buyback. You've mentioned the 20 million shares that you've still got to buy. I guess maybe, could you elaborate on why you decided to stop it at the end of June? And why you were buying at sort of EUR 11, but then it went to EUR 9 and you didn't buy. So I'm a little confused about why that happened.

On Canal+, it's too early for us to make forecast for the coming years. What we know is that we have a very sound operation in the international subsidiaries of Canal+, which are delivering very high level of results and cash, so we are very confident. In France, it will depend for many factors, including the VAT we have already discussed. It's true we will invest a lot, but it's only for 2024 in the new Champions League agreement we have found. But today, we are very confident that taking into consideration and everything being equal, the performance of Canal+ will remain very sound next year at a group level. Concerning the buyback, sorry, but it's -- I think I just have to repeat what I told earlier. It's that today, we have this 20 million share to keep on buying in the coming weeks and months. And we decide depending to what we consider the fair price to come on the market. So today, it's a management board decision. And that's just the reason why we have not acquired any shares since mid-June, but it -- we will come back on our vision and on our decision to consider the price -- the fair price. I can say nothing else, sorry.

The last question is coming from the line of Jérôme Bodin from ODDO.

François, just 2 small questions. The first one on Editis. There is a deterioration of the free cash flow in H1. So I just want to check what's the reason for that. Is there a CapEx plan or anything else? So this is for Editis. And the second question is still on Editis, but on the spinoff. So I understand that the idea is not to keep any assets within Editis at the Vivendi level, but could you maybe spin more than Editis and add some assets to Editis?

Yes, Jérôme, on the Editis cash flow, what you can say that the deterioration of the cash flow comes from -- mainly from the working capital. And they have no major investment during the first half. So it's the EBITA, obviously, plus some negative impact of the working capital, but that should revert during the second half. So no -- nothing to worry about, more seasonality on the working capital than a negative trend.

And on your last question, the mandate that has been given to the Management Board as regards to the Editis situation, as explained previously, is on the perimeter of Editis. Nothing else.

Thank you, everyone, for your questions today. There will be no further questions. I will now turn you over to your host to conclude today's conference.

Thank you very much. Thank you for your attendance. I wish you a fantastic summer and look forward to getting with you again for our full year -- Q3. Sorry, Q3. Yes, Q3 call, which is going to be held in November -- October, sorry, October 20. Thank you for this clarification and definitely need some summer. Thank you, everyone. Bye-bye. Thank you. Bye-bye.

Thank you, everyone, for joining us on today's call. You may now disconnect your handsets.