REG - Vodafone Group Plc - Update on the merger of Vodafone UK and Three UK

VodafoneAnnouncement

09/12/2024 07:00

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RNS Number : 2345P  Vodafone Group Plc  09 December 2024

9 December 2024

 Update on the merger of Vodafone UK and Three UK

 

On 14 June 2023, Vodafone Group Plc ("Vodafone") announced that it and CK
Hutchison Group Telecom Holdings Limited ("CKHGT"), a wholly owned subsidiary
of CK Hutchison Holdings Limited ("CK Hutchison"), had entered into binding
agreements in relation to a combination of their UK telecommunication
businesses, respectively Vodafone UK and Three UK (the "Transaction").
Following the entry into force of the new UK Listing Rules (the "UKLRs") on 29
July 2024, Vodafone released a further announcement on 30 September 2024
containing certain additional information.

Vodafone now sets out further information relating to the Transaction in
accordance with the new UKLRs.

 

Appendix 1: Non-financial information relating to the Transaction

1.   Related party transactions

Details of the related party transactions that Vodafone has entered into:

·      during the financial year ended 31 March 2022 are set out in note
30 on page 204 of the Company's 2022 Annual Report;

·      during the financial year ended 31 March 2023 are set out in note
30 on page 200 of the Company's 2023 Annual Report;

·      during the financial year ended 31 March 2024 are set out in note
30 on page 216 of the Company's 2024 Annual Report; and

·      during the period from 1 April 2024 to 30 September 2024 are
disclosed in note 13 on page 46 of the Company's interim results for the half
year to 30 September 2024,

 

in each case, as incorporated by reference into this announcement.
Shareholders can access documents incorporated by reference at
 https://investors.vodafone.com/performance/financial-results-and-presentations
(https://investors.vodafone.com/performance/financial-results-and-presentations)
.

 

There have been no additional related party transactions by Vodafone which are
relevant to the Transaction during the period between 30 September 2024, being
the end of the last financial period for which unaudited interim financial
information of Vodafone has been published, and the date of this announcement.

 

2.   Material contracts

 

A.   Vodafone

No contracts have been entered into by Vodafone or another member of the
Vodafone group (not being contracts entered into in the ordinary course of
business): (i) within the period of two years immediately preceding the date
of this announcement that are, or may be, material to the Vodafone group; or
(ii) that contain any provisions under which any member of the Vodafone group
has any obligation or entitlement that is, or may be, material to the Vodafone
group, save as disclosed below.

 

1.   Revolving Credit Facilities

 

(A)  2028 Revolving Credit Facility

 

Vodafone has a USD 3,935,000,000 (as increased to USD 4,004,000,000)
syndicated revolving credit facility with Barclays Bank plc as successor agent
and certain financial institutions as lenders originally entered into on 27
February 2015 and as amended pursuant to an amendment agreement dated 10 March
2021, which matures on 10 March 2028.

 

The facility supports Vodafone's commercial paper programmes and may be used
for general corporate purposes including acquisitions.

 

Interest is charged on loans drawn under the revolving credit facility at a
reference rate plus a margin of 0.375%. Interest periods vary based on the
loan drawn.

 

The facilities agreement includes certain events of default that are customary
for facilities of this nature and which are subject to standard grace periods
and materiality thresholds, including, without limitation, non-payment, breach
of other obligations, misrepresentation, cross default, insolvency-related
matters and cessation of business.

 

As at the date of this announcement, no amount is outstanding under the
facility.

The facility agreement is governed by English law.

(B)  2029 Revolving Credit Facility

 

Vodafone has a EUR 3,840,000,000 (as increased to EUR 4,050,000,000)
syndicated revolving credit facility with Barclays Bank as agent and certain
financial institutions as lenders which it entered into on 28 March 2014 and
as amended by amendment and restatement agreements dated 10 March 2021 and 8
February 2024, which matures on 8 February 2031.

 

The facility supports Vodafone's commercial paper programmes and may be used
for general corporate purposes including acquisitions.

Interest is charged on loans drawn under the revolving credit facility at a
reference rate plus a margin of 0.375%. Interest periods vary based on the
loan drawn.

The facilities agreement includes certain events of default that are customary
for facilities of this nature and which are subject to standard grace periods
and materiality thresholds, including, without limitation, non-payment, breach
of other obligations, misrepresentation, cross default, insolvency- related
matters and cessation of business.

As at the date of this announcement, no amount is outstanding under the
facility.

The facility agreement is governed by English law.

2.   Vodafone Idea implementation agreement

On 20 March 2017, erstwhile Vodafone India Limited ("VIL"), erstwhile Vodafone
Mobile Services Limited, Idea Cellular Limited ("Idea"), Vodafone
International Holdings B.V. and certain VIL promoters and Idea promoters
entered into an implementation agreement pursuant to which the Vodafone Group
and the Idea Group agreed to combine their mobile telecommunications
businesses in India.

The VIL promoters gave customary warranties for a transaction of this nature,
including as to capacity and title and received customary warranties in return
from Idea and the Idea promoters.

As part of the implementation agreement (as amended), the parties agreed a
mechanism for payments between the Vodafone Group and Vodafone Idea Limited
("Vodafone Idea") pursuant to the difference between the crystallisation of
certain identified contingent liabilities in relation to legal, regulatory,
tax and other matters, and refunds relating to Vodafone India and Idea. Cash
payments or cash receipts relating to these matters must have been made or
received by Vodafone Idea before any amount becomes due from or owed to the
Vodafone Group. Any future payments by the Vodafone Group to Vodafone Idea as
a result of this agreement would only be made after satisfaction of this and
other contractual conditions.

The Vodafone Group's maximum potential exposure under this mechanism is capped
at INR 64 billion.

The final liability calculation date under the contingent liability adjustment
mechanism is 30 June 2025 and no further cash payments are considered probable
from the Vodafone Group as at 30 September 2024.

The implementation agreement is governed by the laws of India.

3.   Vantage Towers investment agreement and shareholders' agreement

On 9 November 2022, Vodafone GmbH and Oak Consortium GmbH (formerly SCUR-Alpha
1593 GmbH) (the "Investor"), an entity jointly controlled by Global
Infrastructure Management, LLC, KKR & Co. Inc and other investors (the
"Consortium"), entered into an investment agreement establishing a
co-controlled joint venture (the "JV") for Vantage Towers which, at that date,
was listed on the regulated market of the Frankfurt Stock Exchange (as amended
on 22 March 2023).

Vodafone GmbH contributed its shares in Vantage Towers by way of a capital
increase against new JV shares, while the Consortium agreed to acquire shares
in the JV for cash. Vodafone GmbH and the Investor also agreed that the JV
would make a voluntary takeover offer for the listed Vantage Towers shares
held by minority shareholders.

Vodafone GmbH gave customary warranties for a transaction of this nature,
including as to capacity and title.

On 23 March 2023, Vodafone GmbH, the Investor and Oak Holdings 1 GmbH (the JV)
entered into a shareholders' agreement relating to the JV. Rights to appoint
directors to the management board and to appoint members to the shareholders'
committee are tied to the percentage of shares each of Vodafone GmbH and the
Investor holds in the JV. Vodafone GmbH and the Consortium agreed to a lock-up
period of 3 years post-closing of the transaction, after which each
shareholder will be able to initiate a full or partial sale of its
shareholding in the JV, subject to a right of first offer in favour of the
other shareholder.

The investment agreement and the shareholders' agreement are governed by the
laws of Germany.

 

4.   Emirates Telecommunications relationship agreement

On 11 May 2023, Vodafone entered into a relationship agreement with Emirates
Telecommunications Group Company PJSC ("e&"). Under the terms of the
agreement, subject to relevant regulatory approvals, for so long as e& and
its wholly-owned subsidiaries beneficially own (a) at least 14.6% of
Vodafone's outstanding ordinary shares, e& is entitled to nominate the
e& group CEO to be appointed to the Vodafone Group Plc board as a
non-executive director; and (b) at least 20% of Vodafone's outstanding
ordinary shares, e& will be entitled to nominate a further independent
individual to the Vodafone Group Plc board as a non-executive director. The
e& directors are subject to annual re-election by Vodafone's shareholders.

The relationship agreement also sets out terms for the ongoing relationship
between e& and Vodafone in respect of communications, corporate actions
and voting.

Under the terms of the agreement, e& is subject to a two-year lock-up
period and a standstill for the duration of the agreement (subject to
customary carve-outs and certain permitted actions).

The e& relationship is governed by English law.

5.   Vodafone UK and Three UK contribution agreement

On 14 June 2023, Vodafone, Brilliant Design (BVI) Limited (formerly known as
Brilliant Design Limited), CKHGT, CK Hutchison, Vodafone International
Operations Limited and Vodafone UK Trading Holdings Limited entered into a
contribution agreement under which Vodafone and CKHGT, a wholly owned
subsidiary of CK Hutchison, agreed to combine their respective UK businesses,
Vodafone UK and Three UK.

Vodafone will have a 51.0% interest in the combined business ("MergeCo"), with
CKHGT holding the remaining 49.0%.

No cash consideration will be paid under the agreement, with Vodafone UK and
Three UK contributing differential debt amounts at completion of the
transaction to achieve MergeCo ownership of 51:49. Vodafone UK will be
contributed with £4.3 billion debt and Three UK with £1.7 billion debt,
subject to customary completion adjustments.

Vodafone Group Services Limited, a wholly-owned subsidiary of Vodafone, has
agreed to provide certain business, technology, IT and corporate function
services to MergeCo and its subsidiaries in the ordinary and usual course of
business in consideration for service charges.

Under the terms of the agreement, Vodafone International Operations Limited
provided certain customary indemnities for a transaction of this nature to
MergeCo in respect of pre-completion liabilities and liabilities resulting
from pre-completion actions in respect of Vodafone UK. Vodafone International
Operations Limited also gave customary warranties for a transaction of this
nature, including as to capacity and title and MergeCo also received customary
indemnities and warranties from Brilliant Design (BVI) Limited.

The transaction is subject to anti-trust and regulatory clearances. As at the
date of this announcement, the transaction has received clearances under the
NSIA Act in the UK, the EU Merger Regulation and from the UK's Competition and
Markets Authority (the "CMA") (subject to legally binding commitments relating
to network investment, retail pricing and wholesale pricing and contract
terms), the Egyptian Competition Authority and approval by CKHGT's
shareholders.

The contribution agreement is governed by English law.

6.   Vodafone Italy sale and purchase agreement

On 15 March 2024, Vodafone Europe B.V., Swisscom Italia S.R.L., Vodafone and
Swisscom AG entered into a sale and purchase agreement for the sale of
Vodafone's Italian operations.

The consideration is €8 billion on a debt and cash free basis, subject to
customary closing adjustments.

The transaction is subject to certain customary regulatory approvals.  As at
the date of this announcement, the transaction has received unconditional
approval from the Presidency of the Council of Ministers in Italy (Golden
Power legislation), the Swiss Competition Commission and the EU Commission,
Directorate-General for Competition, under the Foreign Subsidies Regulation,
Italian Authority for Communications (Autorità per le Garanzie nelle
Comunicazioni, AGCOM) but remains subject to approval by the Italian
Competition Authority (Autorità Garante della Concorrenza e del Mercato) and
authorisation under Article 64 of the Legislative Decree no. 259/2003 with
respect to the transfer of the rights to use frequencies.

Vodafone and Vodafone Europe B.V. gave customary warranties for a transaction
of this nature, including as to capacity and title and received customary
warranties in return from Swisscom Italia S.r.l. and Swisscom AG.

The sale and purchase agreement is governed by Italian law.

 

B.   Three UK

Save as disclosed in this paragraph, there are no contracts (other than
contracts entered into in the ordinary course of business) which have been
entered into by Hutchison 3G UK Holdings Limited and its subsidiaries from
time to time (the "Three UK Group"): (a) within the two years immediately
preceding the date of this announcement which are, or may be, material to the
Three UK Group; or (b) which contain any provision under which any member of
the Three UK Group has any obligations or entitlements which are, or may be,
material to the Three UK Group as at the date of this announcement:

1.   Cellnex Transaction

 

On 12 November 2020, CK Hutchison Networks Europe S.à r.l. agreed to sell the
interests of the CK Hutchison group (the "CK Hutchison Group") in various
telecoms infrastructure assets in Austria, Denmark, Ireland, Italy, Sweden and
the UK to Cellnex Telecom, S.A. ("Cellnex") (the "Towerco Transaction"). As
part of this transaction, Cellnex UK Limited (a member of Cellnex's group)
acquired the entire issued share capital of CK Hutchison Networks (UK) Limited
(a member of the CK Hutchison Group, but not the Three UK Group) which held
certain unilateral telecommunications network infrastructure assets previously
owned by Three UK Group under the terms of a sale and purchase agreement. In
addition, On Tower UK Limited (a member of Cellnex's group), acquired the
economic benefit and was required to bear the costs of certain other
telecommunications infrastructure assets of the Three UK Group.

The Towerco Transaction was approved by the CMA on 10 May 2022 and completed
on 10 November 2022.

 

3.   Legal and arbitration proceedings

 

A.   Vodafone

Save as disclosed below, there are no governmental, legal or arbitration
proceedings (including any such proceedings which are pending or threatened of
which Vodafone is aware), during the period covering the 12 months preceding
the date of this announcement, which may have, or have had in the recent past,
material effects on the financial position or profitability of the Vodafone
group.  The proceedings disclosed below are those where the Vodafone group
considers that the likelihood of material future outflows of cash or other
resources is more than remote.

In all cases, determining the probability of successfully defending a claim
against the Vodafone group involves the application of judgement as the
outcome is inherently uncertain. The determination of the value of any future
outflows of cash or other resources, and the timing of such outflows, involves
the use of estimates. The costs incurred in complex legal proceedings,
regardless of outcome, can be significant.

1.   VISPL tax claims

Vodafone India Services Private Limited ("VISPL") is involved in a number of
tax cases. As at 30 September 2024, the total value of the claims is
approximately €468 million plus interest, and penalties of up to 300% of the
principal. Of the individual tax claims, the most significant is for
approximately €238 million (plus interest of €672 million), which VISPL
has been assessed as owing in respect of: (i) the sale of an international
call centre by VISPL to Hutchison Telecommunications International Limited
group ("HTIL"); and (ii) the acquisition of and/or the alleged transfer of
options held by VISPL in Vodafone India Limited. Item (i) is subject to an
indemnity by HTIL. Item (ii), which forms the largest part of the potential
claim, is not subject to any indemnity.

A stay of the tax demand was obtained following a deposit of INR 2,000 million
(€22 million) being paid, and a corporate guarantee being provided by
Vodafone International Holdings BV ("VIHBV") for the balance of tax assessed.
On 8 October 2015, the Bombay High Court ruled in favour of VISPL in relation
to the options and the call centre sale. The Indian Tax Authority has appealed
to the Supreme Court of India. The appeal hearing has been adjourned
indefinitely. A claim in respect of the transfer pricing margin charged for
the international call centre of HTIL prior to the 2007 transaction with
Vodafone for HTIL assets in India has now been settled. While there is some
uncertainty as to the outcome of the remaining tax cases involving VISPL, the
Vodafone group believes it has valid defences and does not consider it
probable that a financial outflow will be required to settle these cases.

2.   Netherlands tax case

Vodafone Europe BV ("VEBV") received assessments totalling €267 million of
tax and interest from the Dutch tax authorities, who challenged the
application of the arm's length principle in relation to various intra-group
financing transactions. VEBV entered into a guarantee for the full value of
the assessments issued. VEBV appealed against these assessments to the
District Court of the Hague where a hearing was held in March 2023. The
District Court issued its judgement in July 2023, upholding VEBV's appeal in
relation to the majority of issues and requiring the Dutch tax authorities to
significantly reduce its assessments. VEBV and the Dutch tax authorities have
since appealed the judgement. The appeal hearing is currently scheduled to
take place on 4 February 2025. The Vodafone group continues to believe it has
robust defences but has recorded a provision of €24 million for tax and
interest, reflecting its current view of the probable financial outflow
required to fully resolve the issue and has reduced the guarantee to the same
value.

3.   Germany: price increase class action

In November 2023, the Verbraucherzentrale Bundesverband (Federation of German
Consumer Organisations) initiated a class action against Vodafone Germany in
the Hamm Higher Regional Court. Vodafone Germany implemented price increases
of €5 per month for fixed lines services in 2023 in response to higher
costs. The claim alleges that terms regarding price increases in the consumer
contracts entered into by Vodafone Germany's customers up until August 2023
are invalid under German civil law and seeks reimbursement of the additional
charges plus interest. Customers must enter their details onto the register of
collective actions on the Federal Office of Justice website in order to
participate in the claim. The register opened on 23 April 2024. Whilst the
Vodafone group intends to defend the claim, it is not able to determine the
likelihood or estimate the amount of any possible financial loss at this early
stage of the proceedings.

4.   Germany: claims regarding transfer of data to credit agencies

Individual consumers are bringing claims against Vodafone Germany and/or the
other national network operators alleging that information was passed to
credit agencies up to February 2024 about contracts for mobile services
without consumer consent. The claims seek damages of up to €5,000 per
contract for GDPR (General Data Protection Regulation) infringement. As at 15
November 2024, Vodafone Germany had been notified of 482 claims filed in
various regional courts. The other national network operators are facing
similar claims. Vodafone Germany's position is that the transfer of data about
the existence of a consumer contract (and not about payments in relation to
the contract) to credit agencies is standard practice and justified for the
purposes of fraud prevention. However, given the increasing volume of claims,
Vodafone Germany has stopped this activity. Although the outcome of these
claims is uncertain and consequently it is not possible to estimate a
potential financial loss, if any, at this stage, the Vodafone group believes
it has valid defences and that no present obligation exists based on all
available evidence.

5.   Germany: investigation by federal data protection authority

In 2021, the BfDI (Federal Commissioner for Data Protection and Freedom of
Information) started an investigation into potential breaches of the GDPR in
relation to the systems used by Vodafone Germany sales partners to manage
customer data. Vodafone Germany is working cooperatively with the authority to
discuss the circumstances giving rise to these issues and is currently
conducting settlement talks with the aim of reaching a constructive resolution
of the proceedings. Under the GDPR the authority has the power to impose fines
of up to 2% of the Vodafone group's annual revenue from the preceding
financial year. A provision immaterial to the financial statements has been
recorded.

6.   Greece: Papistas Holdings SA, Mobile Trade Stores (formerly Papistas
SA) and Athanasios and Loukia Papistas v Vodafone Greece

In October 2019, Mr. and Mrs. Papistas, and companies owned or controlled by
them, filed several claims against Vodafone Greece with a total value of
approximately €330 million for purported damage caused by the alleged abuse
of dominance and wrongful termination of a franchise arrangement with a
Papistas company. Lawsuits which the Papistas claimants had previously brought
against Vodafone Greece, including one also citing Vodafone and certain
Directors and officers of Vodafone as defendants, were either withdrawn or
left dormant. Vodafone Greece filed a counter claim and all claims were heard
in February 2020. All of the Papistas claims were rejected by the Athens Court
of First Instance because the stamp duty payments required to have the merits
of the case considered had not been made. Vodafone Greece's counter claim was
also rejected. The Papistas claimants and Vodafone Greece each filed appeals.
The appeal hearings took place on 23 February and 11 May 2023. Judgement has
been received and the Court dismissed both of the appeals because the stamp
duty payments had again not been made, except for one aspect of the
proceedings which will be dealt with at a further hearing in February 2025.
Whether the Papistas claimants will appeal the judgement is unknown as at the
date of this announcement. Vodafone Greece is continuing vigorously to defend
the claims and based on the progress of the litigation so far the Vodafone
group believes that it is highly unlikely that there will be an adverse
ruling. On this basis, the Vodafone group does not expect the outcome of these
claims to have a material financial impact.

7.   UK: Phones 4U in Administration v Vodafone Limited, Vodafone Group Plc
and Others

In December 2018, the administrators of former UK indirect seller, Phones 4U,
sued the three main UK mobile network operators ("MNOs"), including Vodafone
UK, and their parent companies in the English High Court. The administrators
alleged collusion between the MNOs to withdraw their business from Phones 4U
thereby causing its collapse. The judge ordered that there should be a split
trial between liability and damages. The first trial on liability took place
from May to July 2022. On 10 November 2023, the High Court issued a judgement
in Vodafone and Vodafone UK's favour and rejected Phones 4U's allegations that
the defendants were in breach of competition law, consistent with Vodafone's
previously stated position that a present obligation does not exist. Phones 4U
has been granted permission to appeal the judgement from the Court of Appeal.
The appeal hearing will take place in May 2025. Vodafone and Vodafone UK
intend to vigorously defend the appeal and the Vodafone group is not able to
estimate any possible loss in the event of an adverse judgement on appeal.

8.   South Africa: Kenneth Makate v Vodacom (Pty) Limited

 

Mr Kenneth Makate, a former employee of Vodacom Pty Limited ("Vodacom South
Africa"), started legal proceedings in 2008 claiming compensation for a
business idea that led to the development of a service known as "Please Call
Me" ("PCM").

In July 2014, the Gauteng High Court ("the High Court") ruled that Mr Makate
had proven the existence of a contract, but that Vodacom South Africa was not
bound by that contract because the responsible director did not have authority
to enter into such an agreement on Vodacom South Africa's behalf. The High
Court and Supreme Court of Appeal ("the SCA") turned down Mr Makate's
application for leave to appeal in December 2014 and March 2015, respectively.
In April 2016, the Constitutional Court of South Africa ("the Constitutional
Court") granted leave to appeal and upheld Mr Makate's appeal. It found that
Vodacom South Africa is bound by the agreement and ordered the parties to
negotiate, in good faith, and agree a reasonable compensation amount payable
to Mr Makate or, in the event of a deadlock, for the matter to be referred to
Vodacom Group's Chief Executive Officer ("the CEO") to determine such
compensation amount. Mr Makate's application for the aforementioned order to
be varied from the determination of an amount to a compensation model based on
a share of revenue, was dismissed by the Constitutional Court. In accordance
with the Constitutional Court order, and after negotiations failed, the CEO
issued his determination on 9 January 2019. However, the CEO's award of R47
million (€2.4 million) was rejected by Mr Makate, who subsequently brought
an application in the High Court for the review of the CEO's determination and
award. The High Court, in a judgement delivered on 8 February 2022, set aside
the CEO's determination and ordered him to reassess the amount employing a set
of criteria which would have resulted in the payment of a higher compensation
amount, for the benefit of Mr Makate, than that determined by the CEO. Vodacom
South Africa appealed against the judgement and the order of the High Court to
the SCA. The SCA heard the appeal on 9 May 2023 and its judgement was handed
down on 6 February 2024. A majority of three judges, with a minority of two
judges dissenting, dismissed the appeal and ruled that Mr Makate is entitled
to be paid 5% - 7.5% of the total revenue of the PCM product from March 2001
to the date of the judgement, plus interest. On 27 February 2024, Vodacom
South Africa applied for leave to appeal the judgement and order of the SCA to
the Constitutional Court, resulting in the suspension of the operation of the
judgement and order of the SCA. On 26 August 2024, the Constitutional Court
issued a directive that it will hear Vodacom South Africa's application for
leave to appeal in tandem with its appeal against the SCA judgement and order.
The record of the proceedings in the SCA, with relevant annotations, was filed
in the Constitutional Court on 26 September 2024. Vodacom South Africa, as the
applicant, filed its written arguments on 10 October 2024 and Mr Makate filed
his response on 18 October 2024. The matter was heard by the Constitutional
Court on 21 November 2024 and judgment was reserved.

Vodacom South Africa is challenging the SCA's judgement and order on various
grounds including, but not limited to the SCA ignoring the evidence placed
before it on the computation of the quantum of compensation payable to Mr
Makate, and the SCA issuing orders that are incapable of implemented and
enforced. The CEO's determination in 2019 amounted to R47 million (€2.4
million). The minority judgement of the SCA raised Mr Makate's compensation to
an amount payable of R186 million (€9.6 million). The value of the
compensation amount for Mr Makate, as per the SCA's majority judgement and
order, would at a minimum be R29 billion (€1.5 billion). Mr Makate, in his
recent submissions to the Constitutional Court, has stated that his request is
for compensation in the capital amount of R9.4 billion (€493 million), plus
interest from 18 January 2019. Consequently, the range of the possible
compensation outcomes in this matter is very wide. The amount ultimately
payable to Mr Makate is uncertain and will depend on the success of Vodacom
South Africa's appeal against the judgement and order of the SCA, on the
merits of the case. The Vodafone group is continuing to challenge the level of
compensation payable to Mr Makate and a provision immaterial to the financial
statements has been recorded.

 

9.   UK: Mr Justin Gutmann v Vodafone Limited and Vodafone

In November 2023, Mr Gutmann issued claims in the Competition Appeal Tribunal
seeking permission, as a proposed class representative, to bring collective
proceedings against the four UK MNOs and, in the case of Vodafone Limited and
EE Ltd, their respective parent companies. Vodafone and Vodafone Limited are
named defendants in one of the claims with an alleged value of £1.4 billion
(approximately €1.6 billion), including interest. It is alleged that
Vodafone, Vodafone Limited and the other MNOs used their alleged market
dominance to overcharge customers after the expiry of the minimum terms of
certain mobile contracts (referred to as a "loyalty penalty"). Taking into
account all available evidence at this stage, the Vodafone group's assessment
is that the allegations are without merit and it intends to defend the claim.
The Vodafone group is currently unable to estimate any possible loss in
regards to this issue but, while the outcome is uncertain, Vodafone believes
it is probable that no present obligation exists.

10.  Italy: Iliad v Vodafone Italy

In July 2019, Iliad filed a claim for €500 million against Vodafone Italy in
the Civil Court of Milan. The claim alleges anti-competitive behaviour in
relation to customer portability and certain advertising campaigns by Vodafone
Italy. The main hearing on the merits of the claim took place on 8 June 2021.
On 17 April 2023, the Civil Court issued a judgement in Vodafone Italy's
favour and rejected Iliad's claim for damages in full. Iliad filed an appeal
before the Court of Appeal of Milan in June 2023. The appeal process is
ongoing. The Vodafone group is currently unable to estimate any possible loss
in this claim in the event of an adverse judgement on appeal but, while the
outcome is uncertain, Vodafone believes it has valid defences and that it is
probable that no present obligation exists.

 

C.   Three UK

1.   UK: Mr Justin Gutmann v Hutchison 3G UK Limited ("3UK")

 

In November 2023, Mr Gutmann issued claims in the Competition Appeal Tribunal
seeking permission, as a proposed class representative, to bring collective
proceedings against the four UK MNOs and, in the case of Vodafone Ltd and EE
Ltd, their respective parent companies. 3UK is a named defendant in one of the
claims with an alleged value of £507 million, including interest. It is
alleged that 3UK and the other MNOs used their alleged market dominance to
overcharge customers after the expiry of the contractual minimum terms of
certain mobile contracts. Taking into account all available evidence at this
stage, 3UK's assessment is that the allegations are without merit and it
intends to defend the claim.

 

4.   Significant change statement

On 14 November 2024, Vodafone announced that it will commence the third
tranche of a share repurchase programme of ordinary shares up to a maximum
consideration of €500 million ending no later than 3 February 2025.  On 5
December 2024, Vodafone announced that the Transaction had been approved by
the CMA. The approval is subject to legally binding commitments relating to
network investment, retail pricing and wholesale pricing and contract terms.
 There have been no other significant changes in the financial position of
Vodafone since 30 September 2024, the end of the last financial period for
which unaudited interim financial information has been published.

 

Appendix 2: Synergy benefits

 

Vodafone estimates that, following Completion, the Transaction is expected to
result in substantial efficiencies totalling to more than £700 million of
recurring annual cost and capex synergies by the fifth full year
post-completion, with an implied NPV of over £7 billion.

Sources of synergies include:

·      bringing together our network infrastructure, which allows us to
run and scale the network at lower unit costs compared to standalone
capabilities (c.40%);

·      consolidation of IT systems (c.10%);

·      rationalisation of the combined marketing, sales, distribution
and logistics activities (c.40%); and

·      efficiencies in general and administration costs (c.10%).

In addition to cost and capex efficiencies, there is also an opportunity to
realise material revenue synergies underscored by greater access to the
consumer market, cross-selling opportunities from the Vodafone UK and Three
UK mobile bases, and incremental opportunities from accelerated Enterprise 5G
use-cases and fixed wireless access (FWA) rollout. These benefits are
contingent on the Transaction and could not be achieved independently.

To achieve these, MergeCo expects to incur approximately £500 million of
integration costs, most of which will be incurred in the first five years
post-completion.

The estimated efficiencies in this paragraph reflect both the beneficial
elements and relevant costs. These have been quantified and built up from a
detailed analysis of each of the sources of synergies identified and are
unaudited numbers based on management estimates.

 

Notes

Information that is itself incorporated by reference into the above documents
is not incorporated by reference into this document. It should be noted that,
except as set forth above, no other portion of the above documents is
incorporated by reference into this document and those portions which are not
specifically incorporated by reference into this document are either not
relevant for Shareholders or the relevant information is included elsewhere in
this document.

 

Any statement contained in a document which is deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for the purpose
of this document to the extent that a statement contained herein (or in a
later document which is incorporated by reference herein) modifies or
supersedes such earlier statement (whether expressly, by implication or
otherwise). Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this document.

 

The contents of Vodafone's website or any hyperlinks accessible from it do not
form part of this document and investors should not rely on them.

 

 

 

- ends -

 

 

 For more information, please contact:
 Investor Relations:  i (https://investors.vodafone.com) nvestors.vodafone.com  ir@vodafone.co.uk (mailto:ir@vodafone.co.uk)  Media Relations:  Vodafone.com/media/contact (https://Vodafone.com/media/contact)  GroupMedia@vodafone.com (mailto:GroupMedia@vodafone.com)
                      (https://investors.vodafone.com)
 Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14
 2FN, England. Registered in England No. 1833679

 

About Vodafone

Vodafone is a leading European and African telecoms company. We provide mobile
and fixed services to over 330 million customers in 15 countries (excludes
Italy which is held as a discontinued operation under Vodafone Group), partner
with mobile networks in 45 more and have one of the world's largest IoT
platforms. In Africa, our financial technology businesses serve almost 83
million customers across seven countries - managing more transactions than any
other provider.

 

Our purpose is to connect for a better future by using technology to improve
lives, businesses and help progress inclusive sustainable societies. We are
committed to reducing our environmental impact to reach net zero emissions by
2040.

 

For more information, please visit www.vodafone.com (http://www.vodafone.com)
follow us on X at @VodafoneGroup or connect with us on LinkedIn at
www.linkedin.com/company/vodafone.
(http://www.linkedin.com/company/vodafone)

 

 

About CK Hutchison Holdings Limited

 

Listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock
Code: 1), CK Hutchison Holdings Limited and its subsidiaries (CK Hutchison
Group) are principally engaged in four core businesses: ports and related
services, retail, infrastructure and telecommunications. The diverse
businesses of the CK Hutchison Group and associated companies operate in over
50 countries/markets across the world.

 

For more information, please visit www.ckh.com.hk

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