Vivendi Universal has partially completed the sale of its publishing businesses, a move seen as essential if the troubled French media group is to secure its finances.

With three bids on the table, Vivendi has signed a tentative 1.25bn euro (�790m; $1.2bn) sale agreement with Lagardere, a French publishing firm.

Cegetel is seen as key to Vivendi's strategy

But contrary to previous expectations, the deal only covers Vivendi's non-US publishing interests, a group that includes Chambers and Larousse reference books and Les Editions Robert Laffont French-language literature.

The business seen as Vivendi's prize publishing asset, US-based Houghton Mifflin, is to be sold separately.

Houghton Mifflin failed to attract a satisfactory bid, Vivendi said, and the sale process is to be restarted from scratch unless a sufficiently high price is offered by the end of this week.

Telephone dreams

Vivendi has already stripped Vivendi Publishing of some of its key assets.

The arm's games division has been shifted into another arm of the firm, and the L'Express-L'Expansion magazine arm was sold off last year.

As a result, the 1.25bn euros Vivendi has now received will do little to chip away at the firm's 19bn euros in debt.

The need for cash is particularly acute, because Vivendi is aiming to gain control of Cegetel, a French telecoms company in which it has a 44% stake.

Britain's Vodafone is also eyeing Cegetel, and has made an offer of 6.3bn euros to buy out two of its shareholders, BT Group and SBC.

Vivendi is believed to be keen to at least match Vodafone's offer, and reportedly plans to sell its profitable waste and water business to fund the takeover.

Although Vodafone has agreed terms, Vivendi has until 10 November to make a counter-offer.

Strategic crossroads

The firm's deliberations over Cegetel have sparked debate among analysts and investors as to whether its strategy makes any sense.

Vivendi has no business being in water, critics say

Vivendi's 41% share in Vivendi Environnement, which owns a range of industrial firms from water utilities to the Connex transport group, accounted for half Vivendi Universal's revenues in the first six months of this year, and made three times as much profit as its core media interests.

And former chief executive Jean-Marie Messier was criticised for driving the firm too far towards fashionable hi-tech and media businesses, and away from its roots.

Others, meanwhile, argue that it no longer makes sense for Vivendi to own waste management and transport companies while professing to be a new media giant.

Cegetel, which controls the SFR mobile phone operator, is also highly profitable.