Annual report 2014

Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |

Consolidated

Financial Statements

| Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements

Note 3. Discontinued operations

3.2. Plan to sell GVT

On August 28, 2014, Vivendi’s Supervisory Board decided to enter into

exclusive negotiations with Telefonica to sell GVT. After receiving a

positive opinion from employee representatives, on September 18, 2014

it authorized the execution of an agreement with Telefonica for the sale

of GVT. This agreement, the key terms of which are described below,

represents a total enterprise value of €7.45 billion (based on the stock

market value and foreign exchange rates on the date the exclusive

negotiations were entered into with Telefonica), corresponding to a

2014 estimated EBITDA multiple of 10x. The closing of the transaction

is subject to certain conditions, including the approval by the relevant

regulatory authorities, and is expected to occur during the second quarter

of 2015.

Cash proceeds

at the completion date

€4.66 billion subject to the sale price adjustment, based, among other things, on exceptional changes in net working

capital, GVT’s bank debt (approximately €480 million), as well as certain restatements as contractually defined

by the parties, at the completion date of the sale. Depending on these adjustments and the actual numbers as of

the completion date, the amount of cash consideration paid, may be increased or decreased. Moreover, the cash

proceeds, net of adjustments, will also be decreased by any applicable taxes related to the sale, currently estimated at

approximately €500 million. The net sale price is estimated at approximately €3.75 billion.

Consideration shares

7.4% interest in Telefonica Brasil (VIVO/GVT) and 5.7% interest (8.3% voting rights) in Telecom Italia.

Financing

Capital increase at Vivo to fund cash proceeds, guaranteed by Telefonica.

Conditions precedent

Completion of the transaction is subject to obtaining approvals from ANATEL (

Agência Nacional de Telecomunicações

)

and CADE (

Conselho Administrativo de Defesa Econômica

) in Brazil, and other conditions customary in this type of

transaction.

Commitments given

Limited representations and warranties.

Liquidity

With respect to Vivendi’s interest in the combined VIVO/GVT entity:

maximum 180 day lock-up period starting as from the completion date of the transaction; and

tag-along rights.

Governance

No specific governance rights in VIVO/GVT and Telecom Italia.

As from the third quarter of 2014, given the expected closing date of this transaction, GVT was presented in the Consolidated Statement of Earnings, the

Statement of Cash Flows and in Statement of Financial Position of Vivendi as a discontinued operation.

3.3. Sale of Maroc Telecom group

On May 14, 2014, pursuant to the agreements entered into on

November 4, 2013, Vivendi sold its 53% interest in Maroc Telecom to

Etisalat and received €4,138 million in total cash proceeds from sale,

after a contractual price adjustment (-€49 million). On the same date,

Vivendi deconsolidated Maroc Telecom and recorded a capital gain of

€786 million (before taxes and net of costs related to the sale), which is

presented under “Earnings from discontinued operations” in 2014. The

agreements contained representations and warranties customary to this

type of transaction. The main terms of the sale were the following:

Vivendi provided certain customary representations and warranties

to Etisalat relating to SPT (the holding company of Maroc Telecom

group), Maroc Telecom and its subsidiaries. Vivendi also granted a

number of specific guarantees;

the amount of compensation to be paid by Vivendi in respect of

indemnifiable losses incurred by Maroc Telecom or one of its

subsidiaries was determined in proportion to the percentage of

ownership held indirectly by Vivendi in the relevant company on the

closing date (i.e., 53% for Maroc Telecom);

Vivendi’s overall obligation to indemnify was capped at 50% of the

initial sale price, and this threshold was increased to 100% in respect

of claims related to SPT;

the commitments to indemnify provided by Vivendi, other than those

in respect of taxes and SPT, will remain in effect for a 24 month

period following completion of the transaction (May 2016). Claims

for tax-related indemnities must be made by January 15, 2018. The

indemnity related to SPT remains in effect until the end of a four-year

period following the closing (May 14, 2018); and

to guarantee the payment of any specific indemnity amounts

referenced above, Vivendi delivered a bank guarantee to Etisalat in

the amount of €247 million, expiring on February 15, 2018. On July 8,

2014, Vivendi received a discharge of this guarantee for the amount

of €229 million.

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Annual Report 2014