Laurent Mairot – Executive Vice President, Head of Corporate Development and Investor Relations Arnaud de Puyfontaine – Chairman and Chief Executive Officer Herve Philippe – Chief Financial Officer

Laurie Davison – Deutsche Bank Lisa Yang – Goldman Sachs Marcus Diebel – JP Morgan Adrien de Saint Hilaire – Morgan Stanley Bruno Hareng – Oddo Tom Singlehurst – Citi Julien Roch – Barclays Jerome Bodin – Natixis Conor O’Shea – Kepler Cheuvreux

Good day and welcome to the Vivendi’s Third Quarter 2016 Revenues and Earnings Presentation. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Laurent Mairot, Executive Vice President, Head of Corporate Development and Investor Relations. Please go ahead, sir.

Good evening, ladies and gentlemen. Welcome and thank you for joining us for Vivendi’s nine months 2016 earnings. Your hosts for today’s call are Arnaud de Puyfontaine, Chairman of the Management Board and Chief Executive Officer; and Herve Philippe, Member of the Management Board and Chief Financial Officer. This presentation will be in English. This call is webcast on vivendi.com, where presentation slides are available for download. I encourage you to read the important legal disclaimer at the end of this presentation on Page 25. The nine months 2016 financial report will be available on our website after the end of the call. On our website, you will also find a replay of this call that will remain available for 15 days. As usual, we will leave time for a Q&A session at the end of the presentation. And now, I have the pleasure to introduce our Chairman of the Management Board and Chief Executive Officer, Arnaud de Puyfontaine.

Well. Thank you, Laurent, and welcome and thank you for joining us today. Herve Philippe will outline in a few moments, the solid performance of Vivendi during the third quarter and the first nine-month of this year and confirm that the Group is on track to deliver its 2016 targets. Let me just say that our nine months revenues grew by 1.3% and that our adjusted net income was up 24.8%. I would like to point out here, the strong contribution from Telecom Italia in our adjusted statement of earnings, our balance sheet remains solid with a net cash position of €2.5 billion at end September 2016, compared to €2.1 billion at the end of June. These good performances were mainly fueled by Universal Music Group. With regards to the most recent events, I can confirm that the transformation plan for Canal+ in France is well underway. The implementation of the €300 million cost optimization plan for Canal+ in France already started several months ago. The full effect of this plan will be seen in 2018 with savings of about €60 million to €60 million already expected in 2016. At the same time, Canal+ Group completely over ruled its Pay-TV packages in France by providing more customization, more choice and more freedom to its subscribers. The launch of these new offers is scheduled next week on November 15. In addition this past few months have been marked by new developments for Vivendi in content creation and distribution. Let me briefly review some of them. We launched Studio+ in Latin America in October and we’ll soon launch it in France and Italy. We have great ambitions for Studio+, which is the world’s first premium offer for short series aimed at mobile users, initiated by Vivendi Content. Last month, we also launched WatchMusic in Brazil, a premium video music service for mobile. Both apps were developed and designed by Watchever, a Vivendi Village company. This is an excellent illustration of co-operations between our businesses. We have also been taking strong positions in eSports in France. We announced the strategic partnerships with ESL, one of the world’s largest eSports company. Our objective is to start the first official eSport leagues in France and to broadcast these competitions on the Canal+ Group channel. On the distribution side, Vivendi has established our renewed partnerships with digital platforms and telco operators. In music Universal Music Group has recently signed new agreements with leading companies Amazon, Pandora and iHeartMedia. To-date, UMG has licensed, more than 400 digital services around the world. In mobile games, Gameloft has finalized the strategic alliance with the prestigious Japanese player GungHo. The partnerships with Telefonica has been directly illustrated with the launch a few weeks ago of Studio+ and WatchMusic in Latin America. In television, the strategic partnerships singed by Canal+ Group with Orange and Free in France will significantly boost its subscriber base. Last but not least, the integration of Gameloft within Vivendi is proceeding according to plan, and even better. Vivendi’s ambition is to place the Gameloft teams and their creativity at the center of long-term strategy for the company. I didn’t mention this time my favorite band, The Beatles but I can’t end this introduction to you today without referring to the launch of Asphalt Xtreme a few days ago. If like me, you enjoy car racing, you should definitely try this game. One last point, I’m sure you may have questions about the situation with Mediaset. At the end of the presentation we will of course dedicate time to answer your questions. But on this matter we will not respond as our policy is not to comment on ongoing litigations. Thank you for your attention and I would now hand over to Herve Philippe. Herve, over to you.

Thank you, Arnaud, and good evening to all of you. Indeed as Arnaud mentioned, significant steps have been achieved over the third quarter. It’s a pleasure for me to present to you our results for the first nine months of the year, which are not only in line with our forecast but also demonstrates a solid performance in this third quarter. Before going through the results, I’d like to mention the changes in the scope of consolidation and the main currencies of the group. In terms of scope of consolidation, the two main items to point out are, first, as we’ll recall Telecom Italia has been accounted for as an equity affiliate starting December 2015, with a lag of one quarter. Meaning that in Q3, we booked Telecom Italia’s earnings for Q2 based on our economic interest of approximately 17%. Gameloft has been consolidated since June 29, so this is a first quarter with a contribution from Gameloft. With regard to currency changes, I’ve already mentioned during the presentation of our Q1 and H1 results, while we add a positive FX impact in Q1. These trends reverted in Q2 and in Q3. In Q3, the most noticeable change was increasingly negative impact of the pound down 8.4% on average for the first nine months compared to a negative impact of 4.1% for the first six months. Note that the impact of these currency changes are mostly just conventional related mainly at the level of revenues. We expect to continue to experience negative ForEx impact over the remainder of the year. On Slide 4, is the usual scenario of the key financial metrics. Overall, the financial performance of the group significantly improved thanks to a very solid performance during the third quarter especially in September. Mostly supported by the very strong results of Universal Music as well as the sound financial contribution from Telecom Italia. For the first nine months of 2016, total revenues were €7,712 billion, up almost 1% compared to last year at constant currency and perimeter. The increase in revenue at Universal Music more than compensated for the decline in revenues at Canal+. During the third quarter, total revenues were up 3.8% organically, with a very strong performance of Universal Music as we will discuss further. Under IFRS, both EBIT and net income from continuing operations grew, this is mainly due to some non-recurring and non-operating items primarily the capital gain on the sale of a remaining state in Activision Blizzard for €576 million as well as the €240 million reversal of the reserve resulting from the settlement of the Liberty Media litigation both were booked in Q1. In terms of operating performance the non-GAAP metrics. Income from operations on EBITA were down organically by 1.4% and 6.9% respectively marking an improvement compare to the end of June with a very strong performance in Q3. In fact in Q3 organic income from operation was up 10.7% and EBITA was up 25%. At €625 million the adjusted net income was up 25%. Since the beginning of the year Telecom Italia contributed €142 million to adjusted net income. Overall the first nine months, cash generation was very robust, increasing by 46%. This strong cash generation was partially attributable to changes in the Music Group’s business, resulting in less seasonality, which is a logic transition to Slide 5, on Universal Music’s operating performances of the first nine months. As we highlighted during the presentation of the H1 results, the transition the music industry is progressing quickly. And the results for the third quarter as well as first nine months showcased Universal Music’s solid performance. In the beginning of the year, Universal Music’s streaming and subscription revenues increased by 64% more than offsetting the steep decline of 29% in download revenues and a 16% in physical sales. Streaming and subscription operation, our largest source of revenue, now accounted for approximately two-thirds of the digital revenues and more than one-third of recording revenues. The trend towards retail consumption and streaming and subscription services could lead to a lower seasonality effect than in the past. The impact of which may be evident as soon as the fourth quarter of 2016. The positive momentum of streaming also had a positive impact on publishing revenues, which grew by 5.4%. Income from operation and EBITA were up organically by 42% and 37% respectively. This quarter’s change is attributable to increased revenue and lower operating expenses, some of which are timing related and are expected to revert in Q4. During the first nine months, Universal Music incurred €41 million in restructuring charges, mainly due to nine-month of resources to better support the transformation of in our business. The major reorganization planned for this year has been executed. Moving to the Canal+ Group on Slide 6. Overall, the third quarter, we have observed same trends we have been seeing since the beginning of the year. For the first nine months, total revenue decreased by 2.7% organically as a result of two opposite trends. Steady growth of the international Pay-TV operations, mostly in Africa where revenues grew by almost 20% due to the strong evolution of the subscriber base, which stood at €2.2 million at the end of September, the same level, at the end of June due to very good performance considering that at the end of June we had the positive effect of the Euro Championship. This illustrates the success of our strategy of operating the best content and the best offers. The first nine months were also very strong for which we have channels in half with a 9% increase in revenues. Conversely, the Pay-TV operations in France and Studiocanal are still experiencing negative evolution of revenues. Revenues for Pay-TV in France declined by 5.6% over first nine months, due to a 400,000 decrease in committed subscriptions over the last 12 months as well as lower advertising revenues in September with reduced free-to-air window. Studiocanal is still under performing with lighter line-up compared to last year. While the latest release of Bridget Jones’s Baby has been a success, it took place only at the end of September in the UK and in October in France. Coming back to the situation of Pay-TV in half as you remember, last year when we release our financial results for the first nine months, we’ve emphasized that the Pay-TV situation in France would need to be addressed. Earlier, Arnaud highlighted the different initiatives, we have carried out so far. This is not a small fix, these measures are really transforming, this €300 million cost optimization plan with €60 million to €80 million to be achieved in 2016 is well on track. The successful less of the rest of agreements concluded with Free and Orange, the launch of overhauled offers next Tuesday, November 15, will be iterated in the first half of 2017. During the first nine months of 2016, Canal+ Group’s income from operation was down €150 million compared to last year as a result of €140 million decline in revenues at Pay-TV form. Increased content cost at Pay-TV was mostly for the new French League One contract, which started mid-August, not fully compensated with the loss of the English Premier League. Increased content cost for the free-to-air channel in France with the aim of growing the audience and lastly lower profitability of Studiocanal, due to the lack of major releases. The increase in profits from the operation in Africa could not offset all of this impact. This negative trend at the level of income from operation translated into a steeper decline in EBITA, and last year we benefited from €23 million positive one-time items, which offsets €25 million restructuring charges, while this year we booked €16 million in restructuring and organization cost. On Slide 7, for the first time we have the contribution from Gameloft, which has been consolidated since June 29, so only one quarter with €63 million in revenues and €4 million in income from operation. The development of advertising revenues is well on track with €4 million in Q3 compared to €5 million for the full year 2015. In the first nine months of 2016 Gameloft released only two new games. The organic revenue growth of 2% in Q3 and 4% since the beginning of the year demonstrates just how resilient Gameloft business is. Since the end of September, Disney Magic Kingdoms was released in Japan in partnership with GungHo and Gameloft launched two new games, one of which Asphalt Xtreme is off to a very strong start. Of course the other businesses on Slide 8, as mentioned previously we’re working on many new initiatives such as operating network, entertainment renewals in Africa. Before you seeing live events and festivals, a new paid streaming services such as WatchMusic and Studio+ both of which launched in October in certain Latin American countries in partnership with the Telefonica. These initiatives are still in the investment stage, and thus it will translate into losses at the income from operation level. Going to Slide 9, on the consolidated adjusted P&L. The solid performance of Universal Music although the first nine months more than compensated for the decline in revenues at Canal+ Group, but and yet to offset the steep decline Canal+ Group’s income from operation, as well as the fees at Vivendi Village from new initiatives. Results were much better as of the end of June. Income from operation was down by only 1.4% compared to minus 7.6% and EBITA was down by approximately 7% compared to more than minus 20% over the first half. The decrease of the EBITA level is more than offset by €147 increase in income from equity from equity affiliates, resulting from €142 million contribution from the solid performance of Telecom Italia. It’s also €35 million decrease in income taxes despite €41 million tax expense in relation to the taxable €240 million reversal of the Liberty Media litigation reserve. This decrease is mostly attributable to the group performances of Universal Music, enabling the use of noise in some jurisdictions, resulting €23 million reduction in non-controlling interests, mainly due to the acquisition of the minority interest in SECP in Q3 last year. This lead to an adjusted net income of €625 million, up 24.8% compared to last year. Then on Slide 10, the consolidated P&L under IFRS. As you can see, EBIT was up 15.9% and less positively impacted by significant other income as well as the case in 2015. In 2016, we recognized the capital gain relating to sale of our remaining stakes in Activision Blizzard for €576 million before taxes as well as the net reversal of reserve for €240 million before taxes regarding Liberty Media litigation, which was the third. In 2015, we accounted for €651 million capital gain before taxes related to the divesture of our 20% interest in Numericable-SFR. Income taxes were significantly lower in the first nine months of 2016 compared to the same period of last year. This is mainly due to the fact that in 2015, we recognized €124 million income tax charge of the sales remaining stake in Numericable-SFR. In addition 3% tax on Vivendi dividends represented a charge of €48 million for the first nine months of 2016 compared to €122 million for the first nine months of 2015. Finally, as you can see, the decrease in earnings attributable to Vivendi shareholders is mainly due to the significant impact of earnings from discontinued operations booked in 2015, mainly the contribution from GVT, which was sold in May of last year. Therefore, excluding discontinued operations, earnings from continuing operations attributable to Vivendi’s shareholders more than doubled compared to last year reaching approximately €1.2 billion. Moving to the balance sheet on slide 11. In fact the situation at the end of September is quite similar to the end of June. The measure changes in assets at the end of September compared to the end of 2015 were, first, the increase in goodwill as a result of the consolidation of Gameloft, there was a decrease in financial investments mainly related to the sale of the remaining stake in Activision Blizzard as well as the settlement of the litigations with Liberty Media of globally €974 million, which were on deposit. At the end of September of 2016 financial investments were mainly comprised of €3.9 billion for our participation in Telecom Italia; €0.9 billion for taking Ubisoft; €0.4 billion for Telefonica; €0.3 billion for Banijay Group, including bonds; and €0.2 billion for Fnac. The net cash was down €3.9 billion to €2.5 billion at the end of September 2016. The decrease in net cash was related to the payment of €1 dividend in February, €1 dividend at the end of April as well as €1.4 billion in share buybacks is effective in the first nine months. At the end of September, the €2.5 billion in net cash was comprised of €6.4 billion in cash, less €4 billion of gross debt. As already highlighted during our last earnings call, we issued in May bond totaling €1.5 billion in two tranches, with maturities of five and 10 years, under very good conditions. This issuance will refinance a repayment of two existing bonds maturing in December 2016 for €500 million and March 2017 for €750 million. With respect to equity and liabilities, we can highlight three main items. The decrease in equity is linked to the dividends of buyback of share. The decrease in working capital related to the payment of the interim dividend which was acquired as a liability in December 2015, and finally, the decrease in provisions due to the settlement of the Liberty Media litigation. With regard to the changes in net cash, on Page 12, net cash stood at €2.5 billion at the end of September compared to €6.4 billion at the end of December 2015. As already highlighted, the main movements over the first nine months of 2016 with most of them taking place during the first half were the payment of dividend for €2.6 billion; the acquisition of Vivendi shares since the beginning of the year for €1.4 billion, the strong cash generated by our operation CFFO for €0.6 billion. We had also €1.8 billion cash outflows for investments with increases of our stakes in Telecom Italia, Gameloft and Ubisoft, as well as the acquisition of 26% stake in Banijay Group, including bond, and the subscription to the capital increase of Fnac Group. These investments were fully financed by the sale of the remaining stake in Activision Blizzard, as well as the settlement of the Liberty Media litigation. Since the end of September, there is nothing special to point out on the cash front. Thank you. Now we leave you some time for Q&A session. Thank you.

Thank you. [Operator Instructions] We’ll take our first question from Laurie Davison from Deutsche Bank. Please go ahead. Your line is open.

Hi guys, this is Laurie from Deutsche. The first question is just on your one-time items that you cite at Universal Music Group. Can you just specify how much they were in the quarter and the over the nine months? Second question is, you’ve reiterated your guidance on UMG, which was just for a reasonable increase in music revenues – or music results. Can you actually give us an idea now of what reasonable means? Third question is just over the performance at Canal+. How much of the €60 million to €80 million cost saving was in the quarter and what was the underlying OpEx? And lastly, how are you now thinking about income from operations from Canal+ Group for this year? Thank you.

Okay. Let me take those questions. The first is one-time item at Universal Music, was roughly €30-ish million in revenues. This being said, your second question is regarding the data on the growth, and €35 million is the growth we add in the third quarter, from the beginning of the year clearly. This being said, it’s more difficult to be precise on what will be the trend in the fourth quarter of this year, depending on several factors. There’s new releases indeed, but also what will be the seasonality affect due to the change in this industry and the fact that’s streaming and subscription leads to much more revenue month-after-month and probably the seasonality effect we were used to have in the fourth quarter will be less important than it was in the past. This being said, we are very, very satisfied with the trend of the business we’ve seen in this quarter from the beginning of the year. Lastly, you had a question regarding the cost saving at Canal+ Pay-TV. First, I have to say that the cost saving we have said, the €50 million to €80 million were secured, I would say, for 2016. You have to consider that this is for the Pay-TV operations in France, concerning either the Canal+ premium channel and Canal+. So a part of those €60 million to €80 million has already been accounted for in the third quarter. There is still improvement to make in the fourth quarter. This being said, for all the OpEx in the fourth quarter we have to consider that we have some savings that we have also a big increase in the cost to come in the fourth quarter, especially in the Canal+ premium channel, due, first, to the decrease in the base of subscribers. Secondly, with the increase in cost, especially in the Football League One cost, because, as you probably know, the increase has been roughly €100 million for all of the year, but it is accounted for day after day, I would say. So this has an impact also in the first quarter. And you will remember that we have told at the beginning of the year that the losses at the Canal + premium channels will be in the range of €400 million for 2016. So this being said, we are more in line with that. The cost optimization attributable to those channels could be offset partially by less advertising, due to the reduction of the free window of – during the week. So this was the main position I can give to you on this subject.

Thank you. And just on the – you said parts of the €60 million to €80 million was really accounted for, how much? And, was the one-off item, the €30 million, which is stated in revenues, did that fully drop through to income from operations as well, so there is a €30 million one-off item positive in income from operations from UMG as well?

I have not the full impact, but it’s not all in income from operations. Only a part of that, let’s say, one-third, something like that – one-third. To come back to the breakdown of the cost savings at Canal+, I think you should take something in the range of 50% in the Q3, 50% in the Q4 you earn ….

That’s right sir. Thank you.

Thank you. We’ll now take our next question from Lisa Yang from Goldman Sachs. Please go ahead.

Hi, good evening. A few questions on Canal+, if I may. I know it’s early days and you just recently launched a new triple play offers with Free and Orange. But, could you give us a bit of a color on the level of take-up, especially among the Freebox customers, because I understand that they are taking growth out automatically. So any color on that, and the impact you expect on Q4 would be good. Secondly is on your target in terms of number of subscribers at Canal+. I think in the press you talked about 10 million over time. Just wondering what’s the time horizon for that and does that also include the Telecom customers? Third question is on music. So in Q3, you grew 6.5% organically, despite no major release in the quarter. So, any reason why Q4 shouldn’t be stronger than that? And last one is on YouTube. So the European Union recently released their draft directive, which should put a little more pressure on YouTube, to move some of the illegal content on their platform. How do you guys think about the outcome of your renegotiations and how do you size the opportunity? Thank you.

Hi Lisa, it’s Arnaud de Puyfontaine speaking. So let me start by your last question. So as regard to the music, we expect some seasonality to occur in quarter four, but due to the shape of the new business, we should expect, nevertheless, the moves linked to season to be lesser than they used to be in the past. And we’ve got some plan as regards to the release, especially pre-Christmas period. But as you can imagine, all those releases are linked to some marketing investments in different shape or forms. So I guess that we are remaining, in terms of forecast, quite prudent, as regard to be more precise in terms of numbers. As regard your points and what has been done at European level, which is – I mean Google/YouTube is a partner, we’re talking with them with a different nature of discussion. We do believe that creative IP has a value and I think that sustainability of the relationship between an owner and a distribution is based on the capacity to A) enforce regulation as regarded to the property rights, number one. And B) based on a sustainable business model, where every incumbent finds a good reason to be in partnership. So it’s kind of open discussion with YouTube. It has started some time ago, as you know. As you can imagine, this is something that is sensitive enough for me not to be able to get into more details, and I’m sure that we’d be able to be more precise as soon as we have reached an agreement. Maybe on the…

The other questions, your first question was relating to the success of the Free and Orange offers with Canal. I can remind you, that for Free the offer is something in which the subscribers to Free have to opt out if they don’t want to have the specific new offer. At the contrary for Orange fiber client, this is an opt-in situation in which they have to accept the new offer. So this being said, we are very satisfied with the first figures we have on that. Too early to give a precise figure, but it seems that the development of both offers are satisfactory. This leads to your second question, which was referring to the target of new subscribers or the number of subscribers which has been given at one time that adds to 10 million of subscribers, which include obviously the effect of the telco agreements, especially in Free and Orange. This being said, there will be also – to have in mind that the success of the new offers at Canal+ which will be launched next week with a new price for the entry level of the Canal+ main channels at €20, then to add packages of sports, a movie, series, this will be launched next week and we will be, in my opinion, in a position to have better currents of the success of those new offer in the first half of 2017. This is far too early to have fears on that obviously. We are very confident in the success of those new offers, but we’ll see what will be the success in the coming months. To answer your question for – come back to the music, to the trend in the fourth quarter, we can imagine to have better visibility in the fourth quarter, but at the same time, there will be probably with more holidays, we’ll have also more AMF cost and marketing cost on those releases, which can be sort of a mix in terms of income from operation. We have also the last part of the growth of the first nine months, which come from developing countries and this will lead also to some impact in the Q4, this could be more in the developed one. Currently subscription and streaming changed completely this industry and changed completely the figures and the way things are going. So it’s too early for us at the beginning of November to have a precise idea on what will be the impact of this movements on the seasonality into Q4 of this year.

Great, very clear. Thank you very much.

Thank you.

Thank you.

Thank you. We’ll now take our next question from Marcus Diebel from JP Morgan. Please go ahead.

Yes. Hi, it’s Marcus Diebel. Just coming back on the one-off item and Laurie’s question, could you just repeat the absolute number that impacted the income from operations in UMG because of that and describe, maybe, what the nature of that is. I’m just trying to really understand what happened here. Also, then on the profitability in UMG, was there anything on the mix in particular to flag in, in Q3 in terms of higher margin artist that made a difference? And then lastly on merchandising, a small part of the business, but very strong performance in the quarter. So we think about the performance in a similar way for Q4. You mentioned it was largely driven by touring. That was my last question. Thanks.

Okay. I’m going to take – hi Marcus, it’s Arnaud de Puyfontaine speaking. So I’m going to take your last question.

Hello.

I think that we, from the very beginning, when the team joined Vivendi and we started the journey two years ago, say that for us the music has some thrilling growth possibility in terms of its backbone, which is to say to sell music. And, obviously, the streaming development is encouraging, should I say. But we also said that we wanted to think also music in terms of developing our position in the market in other territories. When I say other territories, other business territories, to be able to generate new revenue sources. And it’s all about live events. It’s all about touring. It’s all about merchandising. It’s all about how we can leverage this know-how that we have, this relevance that Universal Music Group has created with its artists and our capacity to develop the kind of occasion deck of our role as a music company in relationship with our artist. What you are seeing in the third quarter is a combination of the first piece, the proof in the pudding is in the eating. And I guess that this is what we started to see. We expect this to grow on the mid-term. I mean, the analysis on a quarter-by-quarter would be an exercise, based on the too short-term, so I am not in a position to be more specific for quarter number four. But I can tell you that we’ll do the very best to be able to make that kind of a new revenue source of growth in our music profile.

To come back to the questions, one-time item for the third quarter in the music, it was linked to a settlement of a litigation which was existing, and it’s €30 million in terms of revenues, and one-third of the level of the income from operation. I remind you that last year we had also one-time positive, which we have booked in the Q2 of last year. To answer just for your question to the profitability and the margin on the different artists, very difficult for me, depending on – one quarter to the other this can change, either the type of the music and what we are doing with this artist. For the merchandising, they were up – revenues from merchandising were up 24% due to stronger touring activity, particularly in the United States, but UK, Spain and Germany were also up. Thank you.

Okay, thanks.

Thank you.

Thank you. Our next question comes from Adrien de Saint Hilaire, the Morgan Stanley. Please go ahead. Your line is open.

Good evening, everyone. Thank you very much.

Hi, Adrien.

I’ve got a few questions please. First of all, I’m just wondering if you’ve booked revenues coming from Pandora and Amazon Music in Q3? Second question again on music. Spotify is trying to renegotiate rates with all the labels. Would you be ready to accept lower payout ratio potentially for greater volumes and if so what is the impact for UMG? And my last question is, I think you have cut the dividends for next year. I think you’re making a saving of about €750 million. What are you going to do with this? Thank you, Arnaud.

Yes, let me take your question on Spotify. We have ongoing discussions, which have not yet ended. I think that Spotify has got an agenda and which is corporate agenda. But on our side, what we want is to create the very best type of agreement which is going to – with Spotify, which is going to reach a few things. A) as you know, we give high priority to paid subscription compared to free consumption, number one. Number two, we want to do the very best to be able to accelerate the growth of all the incumbents in the streaming platform and the leadership currently is the Spotify one. So we want to create the condition to be a partner that is going to help Spotify to reach its ambition. And C) we think that at a certain stage, profit and margins are going to be something that it should be delivered if you want to get a sustainable business on the long-term. And we do see that more in terms of being able to get the right price. What we do the investment, the quality of our products is something that has a value and we are not with a mindset to decrease price to increase volume, but rather to – you know if you pay peanuts, you get monkeys, so to be able to give the right value through what we offer, which is a second to none experience to the customer. So not expecting to be part of a decrease of the yield of the subscription, if I can use that image. But, I mean, discussion not yet ended. I can’t comment anymore on this. But just to give you a flavor of what is our mindset as regards to globally the value we give to what we do.

To answer your question on new agreements with Amazon and Pandora, first let me say that in music, we have license with more than 400 digital service around the world. So those Pandora and Amazon are important indeed. But as far as I know, the new offers for Pandora is expected to be launched later this year in December I believe. And Amazon was launched only in October. So I don’t believe that there is an impact in the Q3 of this year in terms of revenue for Universal Music. To answer your question on the dividend, this was to be very clear on what will be the policy on the dividend and to be in line with what has been told during the year, beginning – in our last dividend announcement in the beginning of this year in February, where we explained that we still had to return €1.3 billion to shareholders before mid-2017 and we had many occasions to say that it could be either buybacks or the ordinary dividend. As we have already bought back around €700 million starting in February, up to now, I would say, we are considering that the level of dividend would be normally in the range of €0.40 per share ordinary dividend concerning the 2016 result, which will be distributed normally in April 2017. This was the occasion for us to be more precise on that.

Herve, just one follow-up. The €0.40, is that a good base for the outer years, if we assume that the adjusted net income, well, stays at least where it is, or continues to grow?

I’m sorry, I didn’t capture your question.

My question is shall we consider the €0.40 of dividends as the right base for the future years?

Well. It will depend on the level of the adjusted net income, it will depend what are doing, the other competitors in this industry and it will also depend – to be very clear, so it makes a lot of conditions – of the level of the contribution of Telecom Italia in our adjusted net income, because as you see, this contribution is quite important in the first nine months, will be also important in the whole year of 2015 indeed. We’ll continue to grow in the future, but it’s only a contribution in result. We have not yet any dividend coming from Telecom Italia. I don’t know if they will distribute something in the future, but today it’s certainly accounting cash coming in, in Vivendi.

[Foreign Language]

[Foreign Language]

Thank you. We’ll now take our next question from Bruno Hareng from Oddo. Please go ahead. Your line is open.

Yes. Hi, good evening. I’ve got a question on TI. I understood that TI was a long-term investment, but what is now your reaction ahead of the Free potentially disturbing the market out there? And second question, more global on the music market, can you share your view on what the music market could be doing in the future in terms of growth? Thank you very much.

Thank you for your question. [Foreign Language] On your second question, well, I mean I’ve always said that we did think that there was potential in terms of the shape of the business and if you just relate to what we did share or exchanges in different circumstances as regards this, what we have seen and what we’re releasing this evening is proving us right as regards to a momentum that is illustrating what was our vision about the potential. What is going to be the kind of the size of the price, et cetera, you can make all the different models. But I’m not going to get into a kind of a wishy washy type of forecast, because I can’t just think that yes, this is an industry which is striking back and we are still optimistic as regard to its potential. So, is it going to be steady as she goes momentum? Certainly not. We do think that on an ongoing basis, like-for-like evolution organic growth, we’re optimistic and we do think that as regard to the potential of the market, when you see the current concentration of the industry in specific territories, we are currently seeing some development in emerging countries. What is going to be the size, the speed, et cetera, time will tell. But I think that there is potential on the long-term. As regard to your question, Bruno, on Telecom Italia, I still maintain that we are a long-term shareholder in the company. I still see Telecom Italia in our vision for South Europe as a part of our strategy and the kind of a positive and compelling momentum in relationship between content owner and telco operators in the long-term. And as regard to the results, I do think that we will get numbers which are going to go from strength-to-strength. So we started the journey in May 2015. We made management changes during spring this year and you can see, when we say that Telecom Italia was like a sleeping beauty, which needed a prince to be able to wake up, I think that the wake-up has started, and I think that will be in a position to again surprise by our capacity to make Telecom Italia stronger. Obviously, this is a market which is moving and we are going to see Iliad getting into the market. And Iliad is a very efficient and a great competitor. So it’s good to have competition when you are strong. So we are welcoming Free in the context of the Italian market. And it has to be kept in mind that the structure of the Italian market is very different from the structure of the French market. So for many different reasons, prepaid versus postpaid, fixed mobile versus the only mobile at this stage from Free in Italy, the level of margins, the pricing et cetera. So if you implement the model of what happened in France to Italy; that would be a mistake. So we are getting ready to welcome our new competitor and we just expect that is going to be a positive force to be able to get a market in Italy that is going to grow. Are we well positioned to take benefit from that momentum? Yes. And also, part of getting new entrants in every of our market is part of our mindset. And we always have in mind a potential competitive environment. Flavio Cattaneo with Giuseppe Recchi and the team that they have built to get into these new chapter for Telecom Italia are very smart people, and you have already seen the momentum that we have announced now 10 days ago or so. And again, more to come.

Thank you very much, Arnaud. [Foreign Language]

[Foreign Language]

[Foreign Language]

Thank you. Our next question comes from Tom Singlehurst from Citi. Please go ahead.

Good evening. It’s Tom here from Citigroup. Thank you very much for taking the call. I had a couple of questions actually. The first one, I just really wanted to pin down what you mean by seasonality within music. Fourth quarter has, obviously, historically been a very strong period for physical sales. When you say seasonality, it’s becoming less pronounced. So you’re basically saying seasonality that the physical sales will be much worse than in previous years, or are you talking about the seasonality of loan schedule? And in that context, are you actually trying to say there will be a slowdown in growth? I’m just trying to specify – talk about with seasonality. And the second thing on music, I think, Marcus made the point and then you did about the big acceleration in merchandising an artist licensing and services. I just wanted to get a sense of the gross margin profile in those areas relative to – for example, the sort of physical and digital streaming revenues. Are we talking a similar sort of gross margin, operating margin profile, because those are areas that are growing very fast. And then very finally…

That’s the third one.

Yes. I do apologize. On the dividend, just to clarify; originally, I thought you’d sort of committed to buy some dividend and a buyback. Clearly the buyback is part of the cash for next year, which is fine, but should we anticipate that the buyback is going to sort of stop now or is there a continued commitment to buy back at all? Thank you.

Let me take the seasonality, question number one. I think that’s a combination of two things. We’re not expecting the growth to be different from the profile of last year, we said two things. It’s clearly linked to two things. The loan schedule obviously has an impact. So we have to take into account this impact in ourselves level obviously, and it will always be part of seasonal effects. But what I meant more precisely, when you see from 2017 and onward, you see the trend. Hopefully in the market that is going to grow in topline, if you’ve got a greater chunk of your sales in streaming, those revenues are spread on a 12-month basis on an even basis, in terms of organic, because very frequently you’ve got quite a loyal clients and when you start to use the streaming as subscription experience, you’ve got your play list, you’ve got your – all your library et cetera, so you remain loyal. So you’re going to have a greater chunk of type of profile of revenues that is going to be spread on the 12-month basis. And with physical, that mechanically, despite the trend that we have announced is on a global minus 2017 since the beginning of the year in terms of physical trend. You will see, nevertheless, the seasonality, the peaks of the seasonality being lesser due to the point that the spread of the streaming subscription revenues are going to be split in 12-months’ time. So two things. Loan schedule, obviously, always a factor of seasonality, but the second thing, the shape and the structure of ourselves will just diminish the kind of peaks and troughs that we have seen over the past few years in the shape of our quarterly results.

So that’s another way of saying, historically, you’ve had much stronger growth in the first half and slightly less growth in the second half and that would just become more even?

We do think that as a trend globally in the coming years. Yes.

Okay.

Let me answer the other question. One was regarding the margins in the music. Specifically on the merchandising, I can tell you is that in merchandising the margins are lower than the rest of the business due to the type of products which are sold in merchandising, which are often T shirts, goodies and so. For your question on dividend and buyback, as we have written in our press release, it doesn’t mean that we’ll not do any buyback in the future. We’re – so we’re just from the shareholders meeting to pursue, to continue the buybacks, but we’ll do that depending on the market, the market condition. If we find that the market evolution needs that we buy back shares, we’ll certainly do that and take a decision at the management level.

May I just add something on your question on margins for the kind of the revenues. It’s true to say that the traditional merchandising goods are low margins, but it depends on your channel of distribution. So, globally, it’s low margin, but if we are more specific, et cetera, we may have an improvement. But you’ve got also a combination, it’s a very mixed basket, because if you’re doing a good touring for instance, live events for instance, prices are getting quite high and we know that this is clearly a part of the business that can be more profitable. So globally this kind of a new revenues is a piece of a big mixed bag in which you’ve got different things. I guess that’s a bigger and the greater we’re going to be, the more specific we’ll be. And then we’re going to be in a position to be more precise.

Terrific, clear. Thank you so much.

Thank you. Our next question comes from Julien Roch from Barclays. Please go ahead.

[Foreign Language]

[Foreign Language]

Three questions, the first one is, you also mentioned a timing related decline in expense in music. I wanted to know whether you could quantify that? That’s my first question. My second question is coming back on the dividend and the buyback. When you announced the initial buyback, my understanding is the buyback was supposed to be €2.7 billion and you’ve done €2.1 billion so far, so you’ve €0.6 billion left. And the dividend was supposed to be €1. So now the dividend is €0.4. Does that mean you’re going to increase the buyback or did you actually lower the overall envelope of return? That’s my second question. And then the third one is Universal Music had a good performance in Q3, but if you look at the industry trends, the U.S. is up 6% in volume in Q3; UK is up double-digit, 12% in volume; France is up 14% in revenue, so it seems that Universal Music has lost share gain in Q3, which is the fifth quarter of underperformance in a row and in the past you say, it was based on the re-schedule, but five quarters in a row, is it still the re-schedule? So is there any other factor at play in that and when do you think that that might change and Universal might gain share? Thank you.

For [indiscernible] and marketing, I would say, because it’s always a timing issue and from one – this is always to say that from one quarter to the other you could have changes in the cost related to the quarter in which you account it for the cost of Anaheim [ph] and marketing. So it goes through some differences in the level of margins from one quarter to the other. To answer your question on dividend, on return to shareholders, maybe several things to say. First, we have returned – if we began in 2014, we have returned to shareholders more than €8 billion of cash flows through ordinary dividends and buybacks. And since the beginning of 2016, we have returned €4 billion, €2.6 billion in ordinary dividend and €1.4 billion in buybacks. And currently the figures you have, considering the total amount for buyback was calculated on the basis of the maximum price authorized by the meeting of shareholders at €20 per share. Indeed, we have an average price of buybacks, which is a little bit above, I would say – little under €17 to €18 share raised up. So this is probably the difference coming from that. For the last question, what was the last question?

The last question is on market share. Universal Music seems to have lost share for five quarters in a row, which has to be more than the re-schedule. So any explanation and when will that turn around?

Okay, this is an important point and we have a look to the market share at Universal Music, I don’t say, quarter-after-quarter, but probably month-after-month and we look very closely to that – positive for Universal Music in 2016, which are both, the death of David Bowie and Prince, which benefited, I would say, don’t say anything – but which benefited to other labels. So we will see what will be the market share in the coming quarter, but this is something looking at clearly.

But if you take, for instance, market share doesn’t always show the whole picture. Quality of the revenue is just as important. And if you take for instance in the U.S., UMG has had top four most streamed albums year-to-date, through September with Drake, Rihanna, Justin Bieber, Kenny West. If you take in the UK, we had seven of the top 10 singles, led by Calum Scotts, number two, and also we had – within the UK, UMG had the biggest selling album of the quarter with Drake. So, again, we can see kind of a global trend. It’s clear to say that the market has had an impact from the passing of Prince and David Bowie, which benefited the market share of a competitor. But we are tracking the evolution of this market share, but we don’t see that as an ongoing trend. There are some special kind of a reason why it is what it is, and we still are committed to grow market share gain to reinforce our position as number one in the industry, but to do that in a way that is going to be based on profitable growth.

And if I can be greedy with one last question, quickly on the one-off, you said €30 million of revenue, €10 million of EBITA, so one-third. The last settlement, which was in Q2, was 50% revenue to operating profit. So why is the margin lower on that settlement?

It’s a different side. So the margin is different, this is the case. So this is I can’t, I’m sorry.

Okay. [Foreign Language]

Thank you. We’ll now take our next question from Jerome Bodin from Natixis. Please go ahead. Your line is open.

Yes. Good evening, everyone. Two questions for me. The first one on music. So you’re now launching WatchMusic in Latam and press mentioned a few weeks ago that you can launch streaming offer in the UK with Sony. So I was just wondering if it’s a new look on streaming and what is the rationale behind this launch? Is it just to get an alternative offer on streaming? And my second one is on Canal+. If I remember well, the AGM, [indiscernible] said that you can launch new offer in other country in Asia, so outside Vietnam. So I was wondering if you could have an update on that plan? Thank you.

To answer your question on music, yes, we have launched WatchMusic in agreement with Telefonica in some countries. We have no fears today to appreciate the success of this new launch and we’ll be more precise on that in the next call in February 2017. For the streaming offer you’re referring to in the UK, it’s mainly – it’s not a streaming offer. In fact, it’s more pre-released, as far as I understand. For Canal+ in Asia, we have no specific things to announce today. We have looked to different possibilities to launch Canal+ in other territories, but there is nothing today which is on the verge to be announced.

Thank you.

Thank you. We’ll now take our next question from Conor O’Shea from Kepler Cheuvreux. Please go ahead. Your line is open. Conor O’Shea: Hi, yes, thank you. A couple of questions left, probably more for Herve. Can I please – could you just remind us what the annual spend is in U.S. dollars, and what the hedging policy is of that spend? Secondly, also on Canal+, on your slide six, you have the annual drop in EBITA of around €125 million, of which about €80 million is from Canal+ France. So assuming the international business is growing somewhat in EBITA, can you just give us a flavor of what – where the main drivers of the decline are, apart from Canal+ channels in France of the decline year-on-year? And then the final question just on Telecom Italia, I understand that you take that in as an associated line with a one quarter lag. They reported yesterday for their third quarter. Can you tell us at this stage what number you will be reporting for the fourth quarter with a one quarter lag in your profit and loss? Thank you.

For the last question, I can say you have to do the math, because it’s quite easy to make the calculation taking roughly 17%. I have not the figure that’s why I say you to – I tell you to make the math, but you can take the third quarter of Telecom Italia, take 17% of that and you are quite close to the figure we will have. So it would be an important and interesting number indeed in the first quarter for us. For the first question, regarding hedging in U.S. dollar for 2017, we hopefully see which is described in detail in the annual report. So we have a policy to hedge and project a figure, and which is done to make some hedge at beginning of the year and then complete it in the following months, to be some more close possible from the Bridget likely we have. And that if we have big commitments let say for output, then we immediately hedge it at the time of the commitment. Conor O’Shea: What is it do in constant dollars, more or less, of programing costs, can you give an estimate?

I’m sorry I’ve not this figure at hand, but probably we will if it is big in price we can give it in the next call and answer your question, but I would say this is not very significant, mainly for acquisition of – we’ve more impact in the currency in the pound in the third quarter than for fourth quarter clearly. Your second question was referring to specifically margins at Canal+. One part of this comes clearly from the Canal+ premium channel, but there are also declines in the actual level of the other Pay-TV activity of with the kind of the subscriber base, which is impacting the EBITA of those activities we have an impact. At Studiocanal, there was a decline in EBITA due to the big decline in revenues and finally also in the free-to-air we have some decline in EBITA. Conor O’Shea: Okay.

So we have – due to the lot of investments which have been done this year. So Pay-TV – international Pay-TV activities are doing well, are performing well that in turn, we improve the profitability of certain parts in the international activities, which have been identified. Thank you. Conor O’Shea: Okay, thanks. Thanks, Herve.

[Foreign Language]

Thank you. We’ll now take our final question from Laurie Davison from Deutsche Bank. Please go ahead.

Yes. Just a two follow-ups please. The Canal+ costs were down €14 million year-on-year, and you said that €15 million, just it was coming from cost cutting. So underlying costs here look to be flat. Should we be taking that forward for fourth quarter and adding in the €15 million to €30 million of the savings then? And then the second question was just, there’s been press reports of a potential merger with Havas, or takeover of Havas. Can you state whether that is even being considered or potentially ruled those out? Thanks.

So hi Laurie, I think that for the first question the best is not to get into the details about the calculation with Laurent Mairot, just to be sure that we would get the kind of appropriate calculation that you can use. On the second thing, I always said and we said, Yannick Bollore and I that we were cousins and I guess that when we did start the journey, what we want is to make Havas a competitive advantage to Vivendi and to Vivendi to be a competitive advantage with Havas. And we’ve seen more and more different initiatives just to make that happen; in content production, in terms of infrastructure, data analytic, just to give you a kind of two examples of this collaborations. I have seen many rumors since I took my job on the June 24, 2014 and I can tell you that there is no subject as we speak. But, never say never. So I can’t dwell more on the situation. What I do see is that there is, as a matter of fact, a convergence between marketing service, communication and media operators. We have seen recently, for instance, WPP taking a stake in the media business in France. So we don’t know what’s going to be the outcome. We don’t know whether it’s going to happen or not. So what I know today is that we make sure that these [Foreign Language] as we say in French, this relationship, is beneficial to the shareholders of the two companies and we do that in a way which is absolutely aligned with appropriate corporate governance. Could there be a next step more compelling in terms of the relationship between the company – both companies? It’s not as we speak on our agenda. Time will tell.

Thank you.

Okay. Laurie, thank you very much.

Well, thank you very much for all your questions and you have a good evening and we all look forward to talking to you again February next year. Have a good evening and [Foreign Language].

Good bye everybody. Thank you very much for your listening. Bye.

Thank you. This concludes today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.