Vodafone Sells Stake in China Mobile for About $6.6 Billion
Vodafone Selling China Mobile Stake Worth $6.6 Bln
Jerome Favre/Bloomberg
A man uses a mobile phone in front of a branch of China Mobile Ltd. in Hong Kong.
A man uses a mobile phone in front of a branch of China Mobile Ltd. in Hong Kong. Photographer: Jerome Favre/Bloomberg
Vodafone Group Plc, the biggest mobile-phone company by sales, is selling its 3.2 percent stake in China Mobile Ltd. for about $6.6 billion (4.3 billion pounds).
About 70 percent of the proceeds will be returned to shareholders through a stock repurchase and the rest will be used to pay down debt, Newbury, England-based Vodafone said today in an e-mailed statement. Morgan Stanley, UBS AG and Goldman Sachs Group Inc. are managing the offer.
Vodafone has said it doesn’t consider its minority holdings essential to the business. The company bought its stake in China Mobile in two transactions between 2000 and 2002 for $3.25 billion. China Mobile, which is 74 percent held by state-owned China Mobile Communications, is the world’s biggest phone carrier by market value.
“People will of course look through this to future disposals,” Mark James, an analyst at Liberum Capital in London, said in a telephone interview. “The bigger ones are likely to prove harder,” he said, referring to Vodafone’s stakes in French operator SFR and U.S. wireless carrier Verizon Wireless.
The 642.87 million China Mobile shares are being offered at a range of HK$79.2-HK$80 apiece, according to the terms, which were obtained earlier by Bloomberg News.
Rainie Lei, a spokeswoman for Hong Kong-based China Mobile, said before Vodafone released its statement that the British company is free to sell its shares.
Review of Holdings
Vodafone Chief Executive Officer Vittorio Colao has said he’s reviewing holdings in SFR and Verizon Wireless. Vodafone hasn’t received a dividend from its 45 percent stake in Verizon Wireless since 2005. Vivendi SA, which owns 56 percent of SFR, has said it would be interested in buying Vodafone’s holding in France’s second-biggest mobile-phone operator.
“Today’s transaction achieves a near doubling of Vodafone’s original investment in China Mobile and combines our stated portfolio strategy with ongoing cooperation with China’s leading telecommunications company,” Colao said today in the statement.
Vodafone rose 0.1 percent in London trading to 159.9 pence at the 4:35 p.m. close in London. China Mobile increased 0.9 percent to close at HK$82 in Hong Kong.
Colao said earlier this year that Europe was one of the company’s three “priority areas” alongside sub-Saharan Africa and India.
The Ontario Teachers’ Pension Plan, which owns 0.42 percent of Vodafone according to Bloomberg data, called in July for a re-examination of Vodafone’s “disastrous” acquisitions record. OTPP has focused on Vodafone’s purchases after the company wrote down the value of its Indian acquisitions by 2.3 billion pounds in May, citing “intense price competition.”
OTPP has said Vodafone trades at a “substantial, persistent” discount to its asset value.
Vodafone said July 23 it would announce a new strategy in the fall focusing on its mix of assets and increasing data use.
To contact the reporter on this story: Matthew Campbell in London at mcampbell39@bloomberg.net
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