Vivendi agrees to sell telecom unit SFR to Numericable in an over $23-bn deal

French media giant Vivendi SA on Saturday agreed to sell its telecom unit SFR Group SA to Numericable, the French cable company controlled by the billionaire Patrick Drahi, in an over €17 billion ($23 billion deal).

The sale puts an end to French construction and media conglomerate Bouygues' month-long desperate attempt to take control of SFR, the country's second-largest mobile operator and become the top telecom company in France. (See: Bouygues raises offer once again for Vivendi's SFR telecom unit in last ditch attempt)

Under the agreed deal, Altice, the Luxembourg-based investment vehicle founded by French cable king Patrick Drahi, which controls Numericable, will pay €13.5 billion in cash and give Vivendi 20 per cent of the company created from a Numericable-SFR merger.

Numericable will also pay Vivendi an extra €750 million if earnings targets are met.

Vivendi can only sell its 20 per cent stake after one year, and must give Altice the first option to buy it.

''After thorough discussions, the supervisory board decided unanimously to select the Altice / Numericable offer, which corresponds to the industrial project offering the highest growth potential, generating the highest value for its customers, employees and shareholders, while best meeting Vivendi's objectives,'' Vivendi said in a statement.

Altice and Numericable will fund the transaction by raising €4.7 billion of capital and with €8.8 billion of debt.

Private equity firms Cinven Group and Carlyle Group have agreed to sell their 35-per cent stake in Numericable to Altice for an undisclosed price.

Paris-based SFR, earlier a joint venture between Vivendi and Vodafone till the British telecom giant sold its entire stake in 2011 to the French conglomerate, provides services for mobile phone, land-line, internet, IP television and mobile internet to more than 21 million customers.

SFR is the second-largest mobile operators in France by subscribers after Orange SA, while Bouygues Telecom is the third-largest, followed by Iliad SA's Free Mobile unit.

Numericable operates a high-speed cable network covering close to 10 million households, providing high definition television, video on demand, high speed internet and telephony services.

It is the first operator in France to have deployed its own fibre network in France, which covers over 8 million households.

A merged SFR-Numericable would have almost 7 million broadband customers and 21 million mobile customers.