Vivendi SA (VIVHY, VIVEF, VIV.FR) agreed to buy Vodafone Group PLC's (VOD, VOD.LN) 44% minority stake in French telecommunications operator SFR for EUR7.95 billion Sunday, a long-awaited move that will give the French media giant access to more cash to increase its dividend and sharpen its focus on existing operations.

For Vodafone, the sale continues Chief Executive Vittorio Colao's strategy of selling minority interests, as the U.K. mobile company is keen to strengthen its position in Europe, India and Africa as a way of increasing shareholder value.

The SFR deal has been highly anticipated by analysts, especially after Vivendi recently increased its financial leeway with the sale of its stake in NBC Universal and the receipt of a settlement from the end of a long-running dispute in Poland.

Vivendi CEO Jean-Bernard Levy said the group is "very pleased" to have secured 100% ownership of SFR, which will help management "to focus further on profitable growth and innovation."

"I am very confident that this will greatly benefit both the group's industrial development and our millions of subscribers and consumers globally," Levy said in a statement, adding that the transaction will "create a significant increase in Vivendi's adjusted net income, enabling us to raise the dividend to our shareholders."

It's also good news for Vodafone investors, with the group announcing Sunday that EUR4.5 billion, or GBP4 billion, of net proceeds from the SFR stake sale will be returned to shareholders via a share buy-back with the remainder of the proceeds used to reduce the group's net debt. The share buy-back will be carried out after the completion of the existing program, which is expected to be completed in June 2011.

Vodafone CEO Colao, who only a few days ago moved to cement the group's position in India, said the board "remains committed to realising maximum value from our non-controlled assets."

"The sale of our stake in SFR, at an attractive multiple, represents a significant further step in the execution of this strategy," he said.

By returning GBP4 billion to Vodafone shareholders, the company is increasing its current buy-back program to GBP6.8 billion in total, equivalent to more than 7% of Vodafone's current market capitalization, Colao noted.

In addition, SFR and Vodafone have agreed to a so-called 'Partner Market' agreement, which will maintain their commercial co-operation for a further three years. This will allow Vodafone "to continue to deliver compelling cross-border services to both consumer and enterprise customers across the major markets of western Europe," Colao said.

Under the terms of the deal, Vivendi will pay Vodafone EUR7.75 billion for its 44% stake in SFR, which equates to a 6.2 multiple of SFR's reported 2010 earnings before interest, tax, depreciation and amortization of EUR3.97 billion. On completion of the deal, which is subject to the approval of local anti-trust regulators, Vodafone will receive a final dividend from SFR of EUR200 million.

Vodafone last Thursday agreed to pay $5 billion to buy out its joint-venture partner, Essar Group, in India, in a bid to strengthen its position in a difficult market.

Vodafone last September restructured its divisions, placing all the minority stakes it holds in other companies into a separately managed unit. The company has also sold its stake in China Mobile for GBP4.3 billion before tax and transaction costs and divested its holding in Softbank Corp. (9984.TO) of Japan for GBP1.3 billion.

Vodafone is also looking to sell its 24.4% stake in Polish mobile operator Polkomtel SA.

The SFR deal is expected to be completed by the end of June 2011.

-By Lilly Vitorovich, Dow Jones Newswires; +44 (0) 207 842 9290; lilly.vitorovich@dowjones.com

--Inti Landauro and Ruth Bender in Paris contributed to this article