Vivendi Wins Tax Windfall of $4.6 Billion
Thursday, August 26th 2004, 10:40 am
By: News On 6
PARIS (AP) _ Vivendi Universal SA has reached a deal with French authorities to change its tax reporting in a way that will boost its bottom line, the entertainment and telecommunications giant said Thursday.
In separate statements, Vivendi and the Finance Ministry confirmed that after months of talks, the government had agreed to allow Vivendi to make the tax change. Vivendi will now be able to offset earlier losses against tax on the profit made by its successful 56 percent-owned SFR-Cegetel telecommunications unit.
The agreement will boost Vivendi's earnings this year by about 500 million euros ($600 million), spokeswoman Agnes Vetillart said. By offsetting 11 billion euros ($13.3 billion) in losses posted between 2000 and 2003, Vivendi will be able to save around 3.8 billion euros ($4.6 billion) in the next five to seven years.
The tax windfall comes as a welcome break for the company, which has been selling off businesses as it recovers steadily from its brush with bankruptcy in 2002, when a buying spree led by former chairman Jean-Marie Messier racked up huge debts and brought the company close to collapse.
Vivendi's activities are now centered on its pay-TV arm Canal Plus SA; Universal Music, the world's biggest music company; and SFR-Cegetel.
The statement released by Finance Minister Nicolas Sarkozy said that in exchange for the change of tax accounting, Vivendi had agreed to create some 2,100 new jobs in France, mainly in areas of high unemployment.
The company will open two new call centers in the northern town of Douai and Belfort in the east, Sarkozy said, each employing 300 workers.
It will also contribute 5 million euros ($6 million) a year for five years to employment schemes in economically deprived zones, enabling a further 1,500 jobs to be created.