Laurent Mairot - Executive Vice President, Head of Corporate Development and Investor Relations Arnaud de Puyfontaine - Chairman of the Management Board, Chief Executive Officer Hervé Philippe - Member of the Management Board, Chief Financial Officer

Thomas Singlehurst - Citi Julien Roch - Barclays Sophie Julienne - Bank of America Merrill Lynch Charles Bedouelle - Exane Laurie Davison - Deutsche Bank Lisa Yang - Goldman Sachs Conor O'Shea - Kepler Cheuvreux Stéphane Beyazian - Raymond James Louis Citroen - Arete Research

Good day. And welcome to the Vivendi First Half 2017 Revenues and Earnings Presentation Conference Call. 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 first half 2017 earnings. Your hosts for today's call are Arnaud de Puyfontaine, Chairman of the Management Board and Chief Executive Officer and Hervé 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 found at the end of this presentation on Page 38. The first half 2017 financial report will be available on our Web site after the end of the call. On our Web site, 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 of introducing the Chairman of our Management Board and CEO, Arnaud de Puyfontaine.

Thank you, Laurent. And warm welcome back to everyone after the break. As always, it's a pleasure to have this media rendezvous with you to share Vivendi's latest developments and our coming projects. I told you last January that after two years, laying the foundations, 2017 would be a year of growth. Six months later, we have largely delivered on our strategy with some remarkable achievements and the launch of new strategic projects. Before handing over to Hervé Philippe, our CFO to comment on our financial results, I would like to review some key strategic highlights of H1. Firstly, Universal Music Group has delivered outstanding performance. The music industry has confirmed its dynamic growth, thanks mainly to the rapid development of streaming. This opens up great opportunities for Universal Music Group, which is already playing a leading role in these transformations through partnerships with multiple digital platforms. Secondly, the implementation of the Canal+ transformation plan in France comparatively is totally on track and starting to deliver results. The new offers enable us to restore value by recruiting new subscribers willing to pay for exclusive and customized contents. At the same time, Canal+ had expanded its client base and enlarged its brand exposure by entering into strategic partnerships with Telecom operators. In addition, Vivendi completed the acquisition of the Bolloré Group stake in Havas in early July. With this transaction, we are writing a new chapter in the strategic plan that we have been implementing since 2014. The next weeks and months will be devoted to facilitating the integration of Havas into Vivendi, and to building a unique value preposition in the creative industry. As regards to Telecom Italia, a lot has happened and being said since we last talked. With Vivendi, Telecom Italia is building a platform for an ambition re-launch, the governance has evolved and the company delivered strong H1 results. Let's start with music. As you know, streaming has become the new driving force in the music industry. The number of paid music streaming subscribers worldwide has increased from 68 million to 112 million within one-year. As you can see on the map, the transformation of music positively affects all territories, both mature and emerging. Thanks to streaming high growth, markets are experiencing spectacular developments in 2016, plus 26.2% in India, plus 20.3% in China and 12% Lat-Am, just to name a few. We are optimistic about the progress observed in these markets, and we see plenty of room for further growth. In China, Universal Music Group and Tencent announced a landmark licensing agreement that will significantly expand the Chinese music market. The deal also includes investments to accelerate UMG’s developments of local Chinese artists and repertoire. In Latin America, the recent success of Despacito, a Universal Music summer hit, illustrates how streaming growth is helping to fuel the global success of Latin artists. The song, which has now been streamed more than five billion times, proves the ability of UMG to discover new talents and promote them at global level. UMG is already taking advantage of these opportunities. It has licensed 400 digital platforms around the world to make its contents and talent available everywhere. It is the first major music company to reach a new comprehensive global licensing agreement with Spotify, the world's largest streaming service. As a consequence, UMG has shown its capacity to generate substantial revenues from streaming. Since the end of 2015, on a rolling 12 month period basis, UMG revenues generated by streaming have doubled. Today, streaming accounts for almost 50% of its total recorded music revenues, and three quarters of its digital revenues. We are working now on accelerating the monetization of music on digital services in all geographies, especially in tough markets, this move being led by Lucian Grainge. Last but not least, Vivendi, through UMG and Vivendi Village, is now present throughout the entire music value chain. That's the rationale behind our initiatives and live events, be it the deployment of CanalOlympia venues in Africa, Olympia Production in France and Vivendi Ticketing in France, in the UK, in the U.S., all this led by Simon Guillaume. On the TV side, we have some very encouraging news and we are in line with our transformation plan. As I told you, in May, the Canal+ transformation plan in France is well underway. Many indicators are showing signs of recovery. First of all, the offers launched late 2016, are recreating value. Let me share with you the following figures. Two-thirds of the new subscribers purchased at least one options package and more than 90% have a 24 months commitment. As a result, you can see on the right of the slides that the new offers are generating higher ARPU than the previous ones. The number of recruitments registered by Canal+ in France has doubled in August 2017, compared to August 2016. For the existing subscriber base, the number of cancellations has decreased since June 2017. We are confident that churn reduction will accelerate in the coming months, thanks to the attractiveness of our content and the number of long term commitments in new recruitments. Development and visibility of Canal+ channels in France also helps create partnerships with the majority of telco operators. This is the reason why Canal+ Group has entered into agreements with Orange, Free and more recently Bouygues Telecom. These partnerships represent almost 3 million additional customers for Canal+. In total, 8 million clients have now access to Canal offer in mainland France. As regards to the cost optimization plan, its implementation is on the right track and will allow us to reduce cost by at least €300 million. We confirm that the full effects of this plan will be seen in 2018. Another key achievements of H1 was the acquisition of Havas in July. This move is completely aligned with our strategic vision. It comes as a Vivendi after consolidating its foundation enters a new development phase. This operation enables Vivendi to gain a unique position in the digital environment at the cross-roads of content, distribution and communications. Here again, we have done what we said we would do. That being said, the advertising market has recently suffered from a slowdown, which has negatively affected the whole industry and the Havas Q2 results. On this situation, I have read and seen many comments, sometimes [caricatural], sometimes irrelevant, sometimes both. Let me be very clear. One, Havas is the best out with play and communication and this acquisition perfectly fits our vision. The recent trends observed in this market don’t affect the strategic rationale behind this transaction. Two, this acquisition was made at the price consistent with industry multiples, and is accretive for Vivendi. The €9.25 per share price still reflects a reasonable premium for this acquisition. And three, even if in 2017, we see a transition year for Havas, we remain confident in its ability to reach its midterm objectives. The recent renewals and wins of prestigious accounts, like [Mishna] or Bristol-Myers Squibb, illustrate Havas’ strong commercial dynamic. So to be crystal clear, if we have to do it again, we would do it again. The new entity, Vivendi Havas, is now present throughout the value chain and offers a unique value proposition in three key areas, data management, brand content and advertising. Vivendi will leverage Havas digital expertise and consumer knowledge to better exploit data and improve the monetization of its content. In exchange, Havas will gain unique access to Vivendi’s premium content and community of talent to offer brands, a more attractive way to connect with their audiences. This new journey is very exciting. One of the world’s largest communication companies is now teaming up with one of the largest media companies. In addition, to conversions between content and communication, we are accomplishing another form of conversions between media and telcos. Through our investments in Telecom Italia, we totally stand-by our strategy, which is to produce and distribute European content with high added value. Telecom Italia is back on track. Thanks to strong Q2 results, H1 Group’s revenues increased to €9.8 billion, a 3.2% organic growth compared to H1 in 2016 and EBITDA grew to €4.1 billion, a 72% organic growth compared to H1 in 2016. The last few months I have been bumpy to say the least, I am of course referring to the intense speculation surrounding Vivendi’s role in stream. I am also referring to the complex situation between France and Italy on the [indiscernible] case. I want to reiterate a few points; Vivendi as the largest shareholder of TIM is strongly committed to fostering the development of an Italian champion, which was stalled over the past decade; Vivendi does exercise the return in [coordinamento] of Telecom Italia, but doesn’t control it according to Italian law; this allows Vivendi to provide greater contribution to the success of TIM. As CEO of Vivendi and Executive Chairman of Telecom Italia, I'm in a position of facilitate the launch of joint projects, which are going to make a difference. We already announced a joint venture project between Canal+ and Telecom Italia to acquire and produce premium content in Italy, including its fourth series and films. After 15 years of underperformance, Telecom Italia was in urgent need of the re-launch. Thanks to the faster than expected turnaround, the first phase of our transformation plan is now completed. With the new governance and managements’ team, the second phase will be dedicated to transforming Telecom Italia model and tapping into the new sources of growth, especially with the development of ultra-broadband. The new management team will bring new efforts, new enthusiasm, new ideas and new resources, to address these challenges. Let me thank Giuseppe Recchi, Vice Chairman of Telecom Italia and Amos Genish, as General Manager for Operations and all the teams at Telecom Italia for their valuable contribution in the new chapter we are writing for the Company. So the first six months of 2017 have demonstrated that Vivendi is moving forward and being a unique entertainment and communication company. Our focus is on creating value with a long-term approach. The first half of 2017 is in line with the outlook given earlier this year and that we are happy to confirm. Excluding Havas, revenues are expected to increase by more than 5% and EBITDA by around 25%. Before handing over to Hervé Philippe, let me welcome Gilles Alix and Cédric de Bailliencourt, who have been appointed today as members of the Vivendi's management board. Their profile and experience will strengthen the expertise of the Vivendi management board, and I am very much looking forward to working with them both and all the team. Thank you for your attention. And I now hand over to Hervé Philippe. Herve? Hervé Philippe: Thank you very much, Arnaud. Good evening to all of you. It's my pleasure to present to you our results for the first half of the year, which are in line with our previously issued guidance for full year. Before going through the results, I'd like to remind you of the changes in the scope of consolidation and the main currencies of the Group. In terms of scope of consolidation, the main difference from last year is our consolidation of Gameloft since the end of June 2016. With respect to Telecom Italia, accounted for as an equity affiliate, you can find details on this investment in notes two and nine to the financial statements, which will be available in our Web site following this call. Regarding Havas, as the closing of the acquisition of Bolloré Group’s 59.2% interest took place on July the 3rd, we will start consolidating it in Q3. However, for information purposes, we have provided you with pro forma financial information, including the financial impact of the transaction, the balance sheet in note 21 to the financial statements. In Q2, the currency changes were partly similar to those observed in Q1 with a negative impact from the Great Britain Pound, down 11.5% on average compared to the first six months of 2016, while the U.S. dollar and the Japanese yen increased against the euro by 2.9 and 4.7 respectively. The positive impact from the U.S. dollar and Japanese yen should reverse in the second part of the year if the currency rates remain at their current level. Note the impact of these currency changes are mostly just conversion related, mainly at the level of revenues. On slide 13, we have a summary of the key financial metrics. As we mentioned in February and again in May, the Group is now poised for growth. In H1 2017, revenues grew 4.8% organically year-on-year, reaching €5,437 million. As we will see a bit, Vivendi’s strong performance of 14% more than offset the decline at Canal+ in the first part of the year, so the strong pickup in the financial performances of the Group. With the strong growth in profitability at Universal Music and a significant improvement at Canal+ in Q2, as we expected, EBITDA was down 11% organically in H1 with very different trends seen between the first quarter and the second one. In IFRS, EBIT reached €362 million, down 31.5% compared to the first half of 2016, which included the one-time impact of €240 million related to the reversal of reserve, resulting from the second month of the Liberty Media litigation. At €320 million, adjusted net income was up 12%; so net cash position stood at €500 million at the end of June 2017, almost stable compared to the end of March against €1.1 billion at the end of December 2016. Slide 14 highlights the significant sequential improvement between Q1 and Q2, 2017. During the second quarter, revenue growth increased to 6.2% organically with solid growth of 15% at UMG, and an improvement at Canal+. At the EBITDA level, the previous trends have reversed. After a decline in Q1, EBITDA increased by 17.1%, many thanks to the continuous growth at Universal Music, as well as the strong improvement at Canal+. Let's turn now on the operating performances of the different businesses. On slide 15, as we can see, Universal Music is performing extremely well. Overall, Universal Music's revenues were up 14% organically and Q2 was particularly strong. A solid release schedule of the continued growth in streaming and subscription revenues led to an organic growth in recorded music revenues of 15.6% despite the decline in physical sales and downloads. In H1 2017, Universal Music benefited from the strong performances of new release from Drake, Kendrick Lamar, The Beatles with the 50th Anniversary edition of Sgt. Pepper’s Lonely Hearts Club Band and and Helene Fischer in Germany. In H1 2017, streaming and subscription were growing fast plus 45% with download declining by 18% on physical sales by only 1.8%, benefitting from more physical releases in the schedule Moana, Fifty Shades Darker, La La Land, and the Beatles. I know that in Q2 2017, we recorded a one-time item in digital revenues for little over €20 million. Music Publishing revenues were up 9.2% and benefited from the positive momentum of Music consumptions, thanks to subscription and streaming. The slowdown in publishing revenues experienced in Q2 was mainly due to timing effect relative to delayed receipt of payments from some digital platforms and collecting societies. Merchandizing and other revenues, which make up a small portion of Universal Music's total revenues, grew by 2.2%. Income from operations was up 40.8% organically, mainly benefitting from the revenue growth, and EBITDA grew 58.4%. Anticipating the question, why we remained very optimistic about Universal Music 2017 performance? We do not expect to experience the same level of growth for the rest of the year, because of a lower seasonal impact on revenues and profitability between the quarters, as well as a tougher comparable basis in the third quarter. Universal Music Q3 2016 earnings were very strong, thanks to solid releases and benefitted from one-time items. Moving to Canal+ on slide 16. As previously mentioned, Canal+ Group's financial situation is improving sequentially as we explained in May. As expected, H1 2017 was still negatively impacted by a tough comparable basis. In Q2, we already saw significant improvement with income from operations flat year-over-year. During the first half of 2017, revenue decreased by 2.4% organically with a decline at pay-TV in mainland France, partially offset by the continued good performance of international operations, mainly in Africa; international pay-TV revenues increased by 6.6% with 22.1% growth in Africa. The robust growth delivered in Africa is a direct result of our strategy of providing the best content to our subscribers. To reinforce our offer, Canal+ launched A+ Sport in July, a new channel dedicated to African and international sports. At the end of June, the number of subscribers in Africa stood at 2.7 million, representing a year-over-year increase of almost 500,000. Pay-TV revenues in mainland France decreased by 5.3% in the first half with a slowdown in the downward trend in Q2, where we saw a decrease of only 2.6%. This decrease can be explained by the lower average number of end-user subscribers compared to H1 2016, and the decrease in advertising revenues due to the addition of the free access windows on the Canal+ channels. However, they have benefited from revenues generated through the wholesale distribution agreements signed in 2016. As we grow the evolution of the subscriber base, even though the retail subscriber base was still in decline H1 2017, as Arnaud explained earlier, we are seeing encouraging signs. Also, bear in mind that in Q2 2017, we had no major sporting event to stimulate recruitment as we had last year with the Euro Championship. Revenues of the free-to-air channels were down 12.3% compared to the first part of 2016 due to the restructuring at CNEWS, as well as the impact of revenues assumption imposed on C8 by the regulator. StudioCanal revenues declined by 6.3% during the first half of 2017; Studiocanal is expected to benefit from a stronger line up during the second half mainly in Q4. Regarding profitability, income from operation was down €111 million, but remained flat year-over-year in Q2 2017 due to the cost optimization plan, and despite the tough comparable basis, mainly for programming costs. Finally, in H1 2017, restructuring charges amounted to €21 million compared to €40 million in H1 2016. As already highlighted, we are experiencing a sequential improvement in Canal+ Group’s financial performance, which should continue in the second half of the year, and we expect to achieve an EBITDA of €350 million. Now, turning to slide 17 and to Gameloft. As a reminder, Vivendi has fully consolidated Gameloft since June 29, 2016, and H1 2016 figures are only for comparison. Gameloft is still performing very well with revenues increasing by 3% at constant currency, primarily driven by the strong performance of the catalog and the substantial improvement in advertising revenues. In H1 2017, advertising revenues were up 128%, reaching 13% of total H1 2017 revenues. In the coming months, Gameloft will launch highly anticipated new games. For slide 18, on new developments. As for Vivendi Village and new initiatives on slide 18, you will see that Vivendi Village performed well in terms of revenues, which grew organically by 3.3%, mainly thanks to Ticketing and MyBestPro, which are performing strongly. In addition, Vivendi Village is investing to develop new activities, primarily live events and festivals. At the New Initiative operating segment, which is mainly comprise by the Dailymotion, revenues were down 38.6%. So new Dailymotion was launched in July, and is already showing good signs, such an increased consumption of premium content and higher user engagement. This should translate into financial performance in the future, mostly in 2018. These new developments are still in the investment stage, and will result in an EBITDA for the second half at approximately the same that in the first half. Slide 19 is on Corporate. It incurred higher legal fees connecting to our deployments in Italy and to the settlement of several litigations, which had some positive impacts in cash of below EBIT highlights, the settlement of the transaction in the U.S., or the settlement of litigation with the tax authorities in France with respect to the fiscal year 2012. Going to slide 20, and to the presentation of the consolidate P&L. As we saw earlier, despite reaching a turning point in Canal+ financial performance in Q2 2017, the strong growth of Universal Music’s EBITDA was not enough to offset the decline in Canal+ Group’s EBITDA in Q1 and the [indiscernible] initiatives. Therefore, EBITDA was down 9.2% compared to H1 2016. But the decrease in EBITDA was nearly offset by the increasing contribution of Telecom Italia in the first half of 2017 compared to the first half of 2016. However, because of the one-time item recorded in 2016, the €240 million reversal of reserve related to the Liberty Media litigation in Q1 2016, the EBIT was down €167 million. Below EBIT, H1 2016 was also positively impacted by the sale of our remaining stake in Activision Blizzard for €576 million before taxes, which together with the Liberty Media settlement, largely explain why earnings attributable to Vivendi shareowners is down 80.7% at €176 million. However, adjusted net income, which reflects the operating performance, grew 12% year-over-year, amounting to €320 million and benefited from the improved contribution of Telecom Italia’s results, as well as lower income tax charges. Moving to the consolidated balance sheet on page 21. The most notable changes compared to the end of December 2016 were; the increase in other financial investments, mainly due the evaluation of our interest; second, the decrease in the net cash, which stood at €500 million at the end of June 2017; and the decrease in consolidated equity of approximately €750 million, mainly related to the dividend payment of €500 million. The decrease in working capital was primarily attributable to the payment of sports rights during the first half. Slide 22 is on cash flow from operation. In H1 2017, cash generation was lower than last year, which is due to timing effects related to advances paid to certain Universal Music artists at the beginning of this year on lower profitability, as well as higher investment in content, mostly sport rights at Canal+. In H2 advances at Universal Music should normalize and Canal+ payments for sports rights, mainly for the French League 1 will be at the same level that in H2 2016. During the first half, we received approximately €350 million as start of the settlement of the litigation related to tax audit in France, which is not included in the cash flow from operation, but in the cash flow after interest and tax. This cash flow after interest and tax reached €337 million for the first six months. Slide 23 is in the net cash evolution. And you see that over the first half of 2017, net cash decreased by €600 million, mainly due to payment of the dividend. The acquisition also of approximately €12 million of Vivendi share during the first quarter for approximately €200 million; and the third, positive CFAIT of €300 million, which notably benefited from the reimbursement from the French Tax. It is worth mentioning that since the end of June, we notably paid approximately €2.3 billion for the acquisition of the stake in Havas, which occurred on July 3rd. Taking this payment into account, our pro forma net debt reached €1.8 billion. Vivendi’s financial statements should benefit from the consolidation of Havas in H2. As you can see on slide 28 in the Appendix, if we have consolidated Havas in H1, it would have an equity impact of roughly 20% on the first half 2017 adjusted net income. Havas equity contribution to Vivendi’s results will come in addition to our 2017 outlook of more than 5% growth in revenues on around 25% growth in EBITDA. Thank you very much. We’ll now take your questions.

Thank you, sir [Operator Instructions]. We will now take our first question from Thomas Singlehurst from Citi. Please go ahead.

Obviously, very strong performance in the second quarter in music, in particular. Just interested in terms of jobs -- in terms of outright sales, it looks like physical might even have grown side in the second quarter. One, whether you could quantify how much of that was Sgt. Pepper, in particular? And if you could maybe quantify the commentary abound trends into the second half. I know last year, you had something of a seasonal slowdown, particularly, I guess driven by physical. So, it would be great if you could put some numbers to that. Second thing, I just wanted to check was on Havas. If we assume 100% of Havas shareholders tender, which seems likely given what’s happened in the broader market. Should we assume that you would then sell back into market? I only said that because you’ve talked in the past about keeping a minority float in place. But that’s not there will you create a minority float? Thank you very much.

Well, maybe for the first question on the physical sales. We have good results in the Q2, mainly for Sgt. Pepper release in this quarter. And also in some countries like Germany, we have physical sales are very important in percentage of the revenues, and we have very good performances with Helene Fischer. We see that for our physical. We are quite flat, more or less, year-on-year and we can have good figures. There’s still a market for physical, which is interesting. I take this opportunity also to say that for downloads, and we had some slowdowns, in addition I would say, in the -- last year, we saw generate something like 30% decline in downloads and this year, it's close to less than 20% in fact. On Havas, I think that you could read the -- not the [operation], which was released year-to-date, it's difficult for us to make other comments on this operation due to the presence of some U.S. people on the call.

Just a follow up quickly on Music, and you talk about physical skewed release schedule, which as you said, is Germany and in lesser extent Sgt. Pepper. Should we assume a resumption of more negative trends in physical in the second half? Is that the major delta you're flagging in today's slowdown?

Well, this is a possibility. So very difficult to say concerning the different phases that could happen, especially in physical in the second part. So I see the possibility, but I cannot give any precise guidance on that.

We will now take our next question from Julien Roch from Barclays. Please go ahead.

The first one is could you tell us how much was the receipt of earnings from digital royalty claim basically in Q2, so the one-off in Q2 revenue, that's my first question. You posted very good results on almost everything, but cash flow which went down to €10 million. Now, Hervé you told us it was because of advanced to artists and payments for spots. And you said that wouldn’t happen in the second half, and the cash flow will be more in line with the operating profit. But at the full year results, you told us that the cash flow would grow faster than the operating profit. So is that still the case, or will the better cash flow in the second half, not compensate for the free cash flow in the first half? That's my second question. And then my third question is on music, in the press release, you said that the very strong growth had continued over the summer. So I would assume 15% growth in July and August. But then you just told us you're expecting a slowdown. So can you square July and August being very strong and do you expect this slowdown in music? These are my three questions. Thank you very much. Hervé Philippe: Well, to answer the first one, the one-time item is roughly €20 million for the first and second quarter. The cash flow, I told that the first part of the year was affected by some timing effect, especially in music and that so that there was a lot of advances, which have been paid especially at the beginning of the year, and we do not expect so important advances in the second part of the year. But this is a very good thing in fact to spend advances for artists, because it shows that we have the relationship with those artists in the future. It's a way to achieve these artists and to develop the catalog. So this is a very positive effect with such spending in the music. So Canal+ obviously we have to pay for the sports right. And so second part of this year, we’ll have not the same effect because as you probably remember, the increase in the sports right at Canal+ occurred last year at the beginning of the second part of the year. But what is also important for our cash generation is to know that after interest on tax, we had very good figure exhibiting this year due to some specific events in litigation, and especially in tax litigations. So we have €300 million of cash generation after interest and tax. And generally speaking, there is no reason for the cash flow from operation to be very different from the operational results of the group.

And on music, you said that July and August were same growth as the Q2. But then you’re talking about this slowdown. So if you could reconcile the two? Hervé Philippe: No, we’ll give the figure for the Q3 in due time. I would say we know that last year, Q3 was particularly strong. So we’ll see. We cannot give specific figures on the Q3 today.

We will now take our next question from Sophie Julienne from Bank of America. Please go ahead.

Two question from me please. So you made an agreement with Tencent for licensing your content. Did that agreements lead to an upfront payment from Tencent? And your shares, is it included in your Q2 organic growth? And my second question is around the cost savings. How much cost savings were achieved in the first half of the year, please? Hervé Philippe: Well, to answer the second question on cost saving, I can say that we are very well on track. As you probably know, we have given the figure of more than €300 million of cost optimization on savings plan, I would say, at Canal+; €100 million was already achieved in 2016; and for the first part of 2017, we have reached something [€290 million], I would say. So we are very well on track and we are very good also to achieve the goal sooner than expected. For Tencent, it's very difficult to disclose the terms of the agreement. We are very optimistic with the development of the business in China. And the impact of Tencent in the first part of this year is very marginal. In fact, in terms of figures, so it's no huge amount of [indiscernible] which has been accounted for in our accounting in Q1 and Q2. But we are very, very optimistic for the development of the business in developed income trade and especially in China.

We’ll now take our next question from Charles Bedouelle of Exane. Please go ahead.

I just have one question. Can you just explain on the core retail subscribers in France, and maybe also in international operation at Canal. What is happening and why we should have better quarter after the year slightly less good quarter in terms of recruitment. I mean what drives the seasonality, anything new happening. And just to link maybe your comments in August with the actual results of Q2. Thanks. Hervé Philippe: Well, I just can’t comment. To say that there is no measure of cost even in 2017 neither the Euro Football or the Olympic games occur in 2017. There is just one thing, which is very interesting, which is the recruitment of Neymar by the Paris Saint-Germain, and it shows very good trend in recruitment due to that. But to come back to Q2, there was no major impact of very specific events.

And then maybe just a very quick follow up. You haven't talked a lot about the recent announcement made by Orange on their side. I'm not talking about the first announcement last year, but the recent one. What does it mean for Vivendi, and maybe can you give us a bit of color on what could -- how could it impact your business?

Charles, its Arnaud de Puyfontaine speaking. As we said we had a first level of collaboration with Orange, which went well but we wanted to go further. So what it does mean is only that we are very happy to have such a great partner as Orange. It has an impact in the way to address the market and to be able to play this convergence that we see in the market. And as regard to what is going to be the results, the result is going to be good for Vivendi. So in terms of the deployment and the recovery of Canal+ pay-TV operation, part of this agreement with Orange and the second announcement, is just the reinforcement on this strategic alliance, which we are very happy with.

[Operator Instructions] We will now take our next question from Laurie Davison from Deutsche Bank. Please go ahead.

First question is just on Canal+. You mentioned declining churn. Can you give us some idea of the churn levels we’re just seeing fall to in third quarter? You also -- just to go back to previous question, just around the gross adds. You mentioned a doubling in August. Can you give us some idea of what the net adds trend is associated with that? Are we seeing net adds flat or even increasing over the month, and what's your expectations for third quarter? And then just lastly, on the €300 million cost saving, if you've already done €290 million. What type of level which you think you can actually reach now over 2017, and is there further to go in 2018? Thanks. Hervé Philippe: Well, to answer the question on the churn, on Chanel+, the churn has not yet decreased at Canal+ as you can see in the appendix of our presentation. But what is important to have in mind is that the churn will probably decline in the coming months. Thanks to the fact that very large majority of new subscribers take the commitment on the 24 month contract. Obviously, this has been launched in fact in September or October of last year. And we have roughly more than 95% of the new subscribers, which choose 24 month contract when they have a commitment. And this is a very positive for the coming months in terms of reduction of the churn. For the cost optimization, we have not evaluated, I would say, the target of cost optimization. We’ll do our best to make much better than the €300 million, which have been already announced. And we are very, very confident in the possibility to make a better figure in 2018.

Maybe just a follow-up. What would you regard, given the trends that you’re seeing on the 24 months contracts? What would you regard the normalized level of churn for Canal+ given what you’re seeing? Hervé Philippe: I don’t want to give some precise data from that. We’ll see what will be the effect of this reduction of the churn. We -- difficult to quantify today, we have some ideas on that. But I don’t want to give too much precision on the figures. We are confident, I would say, in the reduction of the churn.

We will now take our next question from Lisa Yang from Goldman Sachs. Please go ahead.

My first question is on Canal+, the pay-TV front revenue decline was only 2.5% versus [minus 8] in the first quarter. Just wondering what drove the improvement, given when I look at the subscriber numbers the churn was actually slightly worse. So is the difference just coming from the telco deals? That’s my first question. Secondly, still on Canal+, given the improvement in sales and the EBIT comps, especially on the advertising products of Canal+ in the second half. I mean would you say that Canal+ could turn positive in the -- at the revenue level in France? Thirdly, on Universal, could you clarify within the large improvement of 270 basis points in Q2, I think you mentioned this €20 million one-off at the revenue level. What was the drop through on at the margin level? And is there any other one-off impact in that margin. Or is it basically just all the operational leverage from streaming? And lastly, you made some comments last time around potential idea of Universal, but it was may be too early. So just wondering have you updated your thoughts given the strong results? Thank you. Hervé Philippe: Well, to answer the first question, I can say that above the trend in recruitment, we have good ARPU in Canal+, so is satisfaction in seeing that the new subscribers take very often, not only the entry price for Canal+ channel, but also they take one package or more than one package. We have two-third of the new subscribers who choose at least one package in addition to the entry price. So we have enough to price for new subscriber, which have increased in comparison to what it was in the past. And we have enough Q4 existing base of subscriber, which have also increased. Your second question was referring to the revenue for Canal+ in France for the second part of the year. So we’ll see what will be depending on the trend of subscription as the reduction of the churn in the second part of the year. I cannot give you precise guidance on the revenues. But we are very confident for Canal+ Group to achieve the target that we have given to have an EBITDA for Canal+ Group of at least €350 million in the year. For your question on the -- so margin improvement at Universal Music; obviously, there isn’t an impact on the margin on the one-off, which is at the revenue level. But the main driver, I would say, of the improvement of the margin is linked to the operating label and the operating margin, the leverage coming from the growth of this business and especially of the recovery in music. Thank you.

And the comments on the IPO… Hervé Philippe: For the IPO, we’ll see the [IPO] of the music, there is no -- nothing specific on this of the agenda, I would say. Just on that very specific point. We always say that one day that could be an option but there is no plan as we speak to be able to trigger that process.

We will now take our next question from Conor O'Shea, Kepler Cheuvreux. Please go ahead. Conor O'Shea: Three questions from me as well. Firstly, on the full year guidance for EBITDA, adjusted EBITDA 25% growth that implies about €900 million full year EBITDA. Given your reiteration of your targeted Canal+, which implies more than €100 million growth year-on-year, and UMG is already up more than €100 million in the first half, that implies UMG EBITDA even slightly down in the second half. Is that conservatism or is there something specific? Maybe you could remind us the settlements last year in the second half, one off settlements, or perhaps is the new contracts that UMG is signed with Spotify? Is there anything specific or you just prefer to be conservative at the stage? And then second two questions on Canal+. You mentioned the 24 months contracts positive for churn, which we see in other markets with other operators, but has been dilutive to ARPU over a couple of year period. Is that something that might concern you? Or do you think your own situation is different? And then just third question just a follow-up on the improvement in Canal+ revenues sequentially in the second quarter versus the first quarter. The ARPU seem to be similar in the first half as Q1. We had increasing churn, sequentially had more difficult situation of the free-to-air business and a similar outcome at StudioCanal and in International pay-TV business as well. So maybe something else that you could help explain the improvement in that. Again, is it all the telco wholesale additional revenue, or maybe there might be another factor that might explain that? Hervé Philippe: Well, to answer the first question on the guidance on EBITDA. Clearly, we have issued its guidance at the beginning of the year. So we do not intend to change. The guidance we have given and we have at the half of the year, I would say, we are confident with the achievement of this guidance, and you see that the figures go very well in this trend. It does not mean that we cannot do better if we can -- if we will be in a position to do better, we'll do indeed. But the guidance is not qualified, which was the guidance given at the beginning of the year. For Canal+, which is at the -- what is interesting in the situation at Canal+ cost today that we have quite a good balance between the ARPU and the contract, which will have a good impact. We opened the reduction of the churn. So this is one of the reasons of the level of revenue. The other one is obviously the cost optimization plan, which has been announced and which delivers and which is efficient. Conor O'Shea: And the improvement in revenue, anything that maybe you might have left out, or you still attribute that to new subscribers coming on at slightly higher ARPU? Hervé Philippe: Not sure I understand fully the question… Conor O'Shea: The improvement in Canal+'s revenue from Q1 to Q2 for France. Do you attribute that entirely to new subscribers coming on at higher ARPU, or… Hervé Philippe: This is clearly one of the important reasons. The other one is -- so new contracts, we have on the wholesale with the Internet provider. So the other aspect -- as you’re asking, we have seen at the beginning of the year additional customers I would say, which are not subscribers for us, but customers who every month with the free and -- this also has led to an improvement in the figures for the Canal+ in part.

We will now take our next question from Stéphane Beyazian from Raymond James. Please go ahead. Stéphane Beyazian: A few questions, if I may. The first one on the Telecom Italia, you supported a change in management there. So can you share with us a few words on what you think could be even better at Telecom Italia. Got another questions on Universal Music about the margins. Can you also say a few words on the outlook for the margin expansion, which we’re starting to see going up with the impact from streaming and the impact from recent renewal of major streaming platforms? Got the third question on pay-TV is there any case where you've seen the global scale of Netflix or Amazon to sign multi-country deals, has been detrimental to Canal+ for acquiring some rights that Canal+ wanted, which what I guess is another way to ask you. How critical this is to be more pan-European on own or with partners? Thank you.

Well, thank you, Stéphane. And I think that as regard to the point you make, we always said that it was very important with our strategic plan at Vivendi to build a media and entertainment worldwide group with a strong foothold in Europe to build scale. The scalability has been built by two-fold; number one, the capacity to get initiative in the set-up and the build-up of the group, but also the kind of relationship we’ve got with telco operators, that has been one of the key elements of our strategic plan that we have been developing since now three years. So yes, we see an environment, which is highly competitive with the Netflix, Amazon and others. But as a matter of fact, we are also in that competitive environment, seeing a very highly creative capacity to be able to fund very great products; we see that in our TV series; we see that in the initiative; we’re having to make sure that the offer of Canal is best of breed, second to none that is finding the right audience. And when you see the numbers since we have re-vamped the approach in terms of relationship with the customers, structure of the offer, pricing of the offer and distribution strategy, we are currently delivering some numbers in these first half results, which are proving that we are on the right path. But it's just the beginning, and just to cut a long very short; yes, the pan-European approach that we are currently developing is absolutely spot-on in the capacity to clear the scale that we need, and the more scale we’re going to have and the consistency in the environment in the business environment that we are creative and the initiatives that we have in terms of building that scale, the better we’re going to be to be able to compete, that's point number one. Point number two is about Telecom Italia. We have announced 18-months ago a plan to be able to really have a different spin on Telecom Italia, and the plan has proved to be achieved a much quicker than expected, which is good news. But has been delivered by mainly low hanging apples in terms of cost structure with some interesting numbers we have seen in fixed-line growth for instance, also at the same time. But we need to build with Telecom Italia a very long-term and sustainable growth for the future. And when you see the environment in which we are competing, it's very important for Telecom Italia to be able to be the leader in terms of 4P and in terms of the capacity to play a big role in the capacity to engage with the Italian customer base in the most efficient way. To do that, we have the ongoing investments that have been committed by Telecom Italia in terms of [Banda Para Larga], and as regard to the capacity to create a compelling offer in the market is very important to benefit from the capacity for the number one shareholder of Telecom Italia, so called Vivendi, to be able to engage with Telecom Italia in a way to create a win-win proposition. So this is the reason why we have put in place two things; A, the status, as I said at the beginning of this call, of direction and [coordinamento], which is providing us with the possibility really to have a nimble approach to what we are currently implementing on Telecom Italia. And as regard to the management, the arrival of Amos Genish who was the ex-chief executive of GVT and then moved on in Telefônica, has taken the role of General Manager, in-charge of operations on the 28th of July this year. And we have launched an internal and external process as regard to the final decision in terms of management, which is due to be implemented in the coming weeks, so more to come. But on the mid-term perspective, the reality is company, which once upon a time, used to be the best of breed player in telco European business, bigger than Telefônica, British Telecom or France Telecom in the early 90s, present in 28 countries with the best of breed lab in terms of innovation, they invented the MP3.com for reasons that I'm not going to comment on. The story over the past decade has not been illustrated by a great deal of success, and Telecom Italia has been seeing in the recent over past as a prey rather than a hunter. Our objective in our pan-European perspective and the willingness from Vivendi to be able to take a role and to be a shareholder of Telecom Italia is really to be able to create a win-win proposition and to make Telecom Italia great again to the benefit of Italy, Italian customers, perfectly aligned with the plan of the government. And this is what we're going to do, and this should be illustrated by good set of figures. So hope to be in a position to on the long term define that Telecom Italia is going to be great again. Hervé Philippe: Well, the question regarding the margins at Universal Music I just can confirm that we are satisfied with the evolution of the margin during the first part of this year. And this improvement was largely driven by the increase in revenue, which has created operating leverage and overheads declining as a percentage of the sales. These were really the driver of the margin expansion. This being said, from one quarter to the other we can have some variation in the margins, especially due to the mix of products we have, production on it of albums and what kind of albums in what countries also where the margins can be different. So we are very satisfied, but it doesn't mean that the margins will increase during all the year at the same speed.

We will now take our next question from Louis Citroen from Arete Research. Please go ahead.

I had one on Canal+, the French antitrust listed a number of restrictions back in June. I was wondering if you could comment on that decision, and what we should expect in terms of changes, either on the potential offers you could put together or your operational organization. I guess, type of help you could get from that being listed. Thank you.

So yes, there was a rendezvous as regard to the injunction. And we had hoped that we could get a greater release of constraints as regard to what was imposed on Canal+. But at the end, we are in a position where progress has been made. There’s been a recognition that the competing environment in which Canal+ is operating has relatively changed. And we have now some releasing of constraints that is going to be positive for Canal+. And for the remaining part, they will be important -- Canal+ for the coming two years and a half. But as a matter of fact, if you take an example, we are the best and the greatest investor in the movie industry in France, for instance. So when you compete with a local telco player who wants to control, both telecommunication and content and is launching a movie channel from Luxemburg, I mean as a matter of fact, you can just think are we competing at arm’s lengths in specific aspect and in terms of being able to get the exclusivity. When you get exclusivity, you got to be sure that everybody is going to benefit from the same rule of the game. And as regard to the scale that I think we tackled a few minutes ago, the scalability is also based on the capacity when you invest money in creative content to be able to amortize the cost of the investment you’re making on the Pay-TV, in OTT, in SVOD, in free TV, in every aspect of the distribution. So this environment than in an industry, which is highly disrupted by technology with a much greater power of the consumer that is going to choose how much money, how much time and then which device and when is going to consume the content, it was a urgent need for wake-up call as regard to the legal rule of the game and constraints, we have made first step. We hope that we’ll be able to improve that on the mean term. But it’s a good start, and this will benefit to the shape of the business and the capacity of the creative and talented team at Canal to be able to be a modern player in a fast moving and very highly changing competitive environment that has been the main outcome of the release of part of the injunction last June.

There appears to be no further questions in queue at this time.

So thank you for all the attendants. Have a good evening. And very much look forward to see you again or to talk to you again soon in November 16th. Have a good evening. Thank you very much for your attention. Hervé Philippe: Thank you very much. Bye-bye everybody.

This concludes today’s call. Thank you for your participation. You may now disconnect.