UPDATE 2-Vivendi kicks off wider revamp with Maroc sale deal
* In talks with Moroccan consortium on investment
* Hopes to complete talks by year-end
* Deal represents new growth push by Etisalat
* Vivendi shares up 3.6 pct
PARIS, July 23 (Reuters) - Vivendi SA's long-flagged deal to sell its controlling stake in Maroc Telecom to Abu Dhabi-based Etisalat is just the first step in the French conglomerate's bet that it can remake itself as a media-focused company.
Vivendi said on Tuesday it had entered into exclusive talks to sell its majority stake in Maroc Telecom to Etisalat for 4.2 billion euros ($5.54 billion) in cash.
Vivendi said it hoped to complete the talks by the end of the year and that talks with a consortium of Moroccan investors who could also invest in the company would be taking place in parallel.
The deal, when finalised, would be the first major divestment by Vivendi as part of its year-old strategy to reduce exposure to capital-intensive telecoms to focus more on its media business.
Vivendi's shares were up 3.6 percent at a two-month high of 16.14 euros in early trading.
Vivendi had initially hoped to get as much as 5 billion euros for the stake, but the price was seen as reasonable given Maroc Telecom's lacklustre performance lately and the fact that talks on the stake sale had dragged on for months.
"Despite the price disappointment (at a discount to the closing price), the deal is good news for the group, allowing it to begin its restructuring and the reduction of its debt ahead of a possible spinoff of SFR," analysts at CM-CIC said in a research note.
The deal also signals a new aggressiveness at Etisalat, which had slowed down its pace of dealmaking after an aggressive shopping spree that saw it spend about $12.6 billion on acquisitions between 2004 and 2009.
ACTIVISION, SFR IN FOCUS
The state-owned Abu Dhabi company's bid for Morocco's Maroc Telecom is its first public approach for a foreign company since a $12 billion bid for a controlling stake in Kuwait's Zain failed two years ago.
Since then, the operator has overhauled management by appointing a new chief executive and new heads of finance and strategy with an apparent focus away from overseas forays that failed to add much to the bottom line.
Vivendi is now widely expected to shift focus to finding ways to pull cash out of its Activision Blizzard U.S. video games unit, which it previously tried, but failed, to sell.
It is also expected to consider a spin off of French telecoms unit SFR, which it could eventually list through an initial public offering.
SFR, which has been struggling with competition from upstart operator Iliad, on Monday said it had entered into talks to share part of its mobile network with Bouygues Telecom.
"These two moves mark the first concrete steps of the restructuring programme - as such, we think they should drive a re-rating as the market sees proof something is actually happening," Liberum analyst Ian Whittaker said in a research note.
The Etisalat offer values Vivendi's 53 percent controlling stake in Maroc Telecom at 92.6 Moroccan dirhams per share, below the company's closing share price on Monday of 99.55.
It assigns an enterprise value to Vivendi's stake of 4.5 billion euros, equivalent to 6.2 times its earnings before interest, taxes, depreciation and amortisation.
Vivendi and Etisalat have been negotiating the deal since late April, when the United Arab Emirates-based company submitted a binding offer that was deemed more attractive than a lower, rival bid from Qatar-backed Ooredoo.
The 4.2 billion price includes 300 million euros in 2012 dividends from Maroc Telecom due to be paid to a holding company Etisalat is acquiring but which will instead be paid to Vivendi.
Vivendi is being advised by Credit Agricole and Lazard on the sale and Etisalat by BNP Paribas and Attijariwafabank .