REG - Vodafone Group Plc - VODAFONE AGREES TO TRANSFER EGYPT TO VODACOM

VodafoneAnnouncement

10/11/2021 07:05

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RNS Number : 9159R  Vodafone Group Plc  10 November 2021

10 November 2021

 

VODAFONE AGREES TO TRANSFER ITS 55% INTEREST IN VODAFONE EGYPT TO VODACOM IN
EXCHANGE FOR CASH AND NEW ORDINARY SHARES IN VODACOM

 

Vodafone Group Plc(1) ("Vodafone") announces today that it has agreed to
transfer its 55% shareholding in Vodafone Egypt to Vodacom Group Limited
("Vodacom"), its sub-Saharan African subsidiary. This transfer simplifies the
management of Vodafone's African holdings and further strengthens the delivery
of connectivity and financial services in Africa.

 

 

Transaction rationale

 

The transaction is expected to generate clear benefits for Vodafone, Vodacom
and Vodafone Egypt:

 

·    Vodafone simplifies the management of its African holdings;

 

·   Vodacom gains exposure to another leading business in an attractive
market, diversifying its portfolio and accelerating its growth profile; and

 

·   Vodafone Egypt will benefit from closer co-operation with Vodacom,
enabling it to accelerate growth in financial services and IoT.

 

 

Transaction details

 

The transaction values Vodafone's 55% shareholding in Vodafone Egypt at
€2,722 million on a debt free, cash free basis, implying a multiple for the
last twelve month period ended 30 September 2021 of 7.3x Adjusted EBITDAaL and
12.2x Adjusted OpFCF(2). Based on Vodafone's 55% share of the net debt in
Vodafone Egypt as at 30 September 2021 the total equity consideration is
€2,365 million (the "Purchase Consideration"). Approximately 80% of the
Purchase Consideration (€1,892 million) will be settled by the issue of 242
million new ordinary Vodacom shares to Vodafone at an issue price of ZAR
135.75 per share. As a result, Vodafone's ownership in Vodacom will increase
from 60.5% to 65.1%.

 

The remaining 20% of the Purchase Consideration (€473 million) will be
settled in cash(3).

 

Under the terms of the sale and purchase agreement, the cash element of the
Purchase Consideration will be adjusted for any movement in the net debt and
agreed working capital of Vodafone Egypt between signing and closing. As such,
Vodafone will be entitled to its 55% share of the cash generated by Vodafone
Egypt between signing and closing.

 

The Johannesburg Stock Exchange ("JSE") has taken note that Vodacom's JSE
defined free float will be below 20% as a result of Vodafone's increased
ownership. Given the scale of Vodacom's current liquidity on the JSE, the JSE
has not asked for any remedial steps to be taken. Vodafone confirms that is
has no current intention to dispose of any of its shares in the market to
increase Vodacom's free float.

 

Conditions to completion and indicative timetable

 

A committee of Vodacom's independent non-executive directors has unanimously
approved the transaction. Vodacom has appointed an independent expert,
PricewaterhouseCoopers Inc., to provide a fairness opinion on the proposed
transaction which will be included in the circular. The circular and notice of
a general meeting will be posted to Vodacom Group shareholders in due course.
Given the transaction represents a related party transaction per the listing
requirements of the JSE, Vodafone will not vote on the transaction and the
transaction will require approval by ordinary resolution from the minority
shareholders representing 39.5% of the Vodacom shares.

 

Vodacom has received an irrevocable undertaking to vote in favour of the
transaction from YeboYethu Investment Company (RF) Proprietary Limited which
owns 6.2% of the Vodacom shares in issue and 15.8% of the Vodacom shares in
issue outside those held by Vodafone. Vodacom has also received an
in-principle letter of support to vote in favour of the proposed transaction
from Public Investment Corporation which owns 14.3% of the Vodacom shares in
issue and 36.1% of the Vodacom shares in issue outside those held by Vodafone
as at the date of their letter. The Public Investment Corporation's
in-principle support is subject to it conducting an assessment and evaluation
process upon receipt of the circular.

 

The sale of Vodafone's shareholding in Vodafone Egypt constitutes a Class 2
transaction for the purposes of the UK Financial Conduct Authority's Listing
Rules, and, as such does not require Vodafone shareholders' approval.

 

Completion of the transaction is subject to a number of additional conditions,
including but not limited to: approval from the Financial Surveillance
Department of the South African Reserve Bank and approval from the National
Telecom Regulatory Authority of Egypt. Vodacom has committed to Vodafone that
they will sign a deed of adherence to the shareholders' agreement with Telecom
Egypt. The transaction is expected to close before 31 March 2022.

 

Additional financial information

 

Contribution of Vodafone Egypt to Vodafone financial statements

 

12-month period to September 2021 (€ million)(4):

                    Vodafone Group reported  Adjustment to reflect intercompany charges(5)  Adjusted financials
 Revenue            1,638                    -                                              1,638
 Adjusted EBITDAaL  729                      (49)                                           680
 Capex              (275)                    -                                              (275)
 Adjusted OpFCF(2)  454                      (49)                                           405

 

 

12-month period to March 2021 (€ million)(6):

                    Vodafone Group reported  Adjustment to reflect intercompany charges(5)  Adjusted financials
 Revenue            1,537                    -                                              1,537
 Adjusted EBITDAaL  652                      (48)                                           604
 Capex              (258)                    -                                              (258)
 Adjusted OpFCF(2)  394                      (48)                                           346

 

For the financial year ended 31 March 2021 Vodafone Egypt reported €346
million of profit before tax, and at 31 March 2021 the value of Vodafone
Egypt's Gross Assets was €2,405 million.

 

About Vodafone

 

Vodafone is a leading telecommunications company in Europe and Africa. Our
purpose is to "connect for a better future" enabling an inclusive and
sustainable digital society.  Our expertise and scale gives us a unique
opportunity to drive positive change for society. Our networks keep family,
friends, businesses and governments connected and - as COVID-19 has clearly
demonstrated - we play a vital role in keeping economies running and the
functioning of critical sectors like education and healthcare.

 

Vodafone is the largest mobile and fixed network operator in Europe and a
leading global IoT connectivity provider. Our M-Pesa technology platform in
Africa enables 50m people to benefit from access to mobile payments and
financial services. We operate mobile and fixed networks in 21 countries and
partner with mobile networks in 49 more. As of 30 June 2021, we had over 300m
mobile customers, more than 28m fixed broadband customers, over 22m TV
customers and we connected 130m IoT devices.

 

We support diversity and inclusion through our maternity and parental leave
policies, empowering women through connectivity and improving access to
education and digital skills for women, girls, and society at large. We are
respectful of all individuals, irrespective of race, ethnicity, disability,
age, sexual orientation, gender identity, belief, culture or religion.

 

Vodafone is also taking significant steps to reduce our impact on our planet
by reducing our greenhouse gas emissions by 50% by 2025 and becoming net zero
by 2040, purchasing 100% of our electricity from renewable sources in Europe
and across our entire operations by 2025, and reusing, reselling or recycling
100% of our redundant network equipment.

 

For more information, please visit www.vodafone.com
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, follow us on Twitter at @VodafoneGroup or connect with us on LinkedIn at
www.linkedin.com/company/vodafone
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.

 

About Vodacom

 

Vodacom is a leading and purpose-led African connectivity, digital and
financial services company. From our roots in South Africa, we have grown our
business to include operations in Tanzania, the Democratic Republic of the
Congo (the DRC), Mozambique, Lesotho and Kenya. Our mobile networks cover a
population of over 295.8 million people. Through Vodacom Business Africa
(VBA), we offer business-managed services to enterprises in 48 countries.
Vodacom is majority owned by Vodafone (60.5% holding), one of the world's
largest communications companies by revenue.

 

 

Notes

 

1.   The selling entities are Vodafone Europe B.V. and Vodafone
International Holdings B.V., which are 100% owned indirect subsidiaries of
Vodafone Group Plc.

2.    Adjusted OpFCF defined as Adjusted EBITDAaL less Capex.

3.   The cash proceeds from the transaction will be retained by Vodafone
for general corporate purposes.

4.  Converted from EGP to € at an average rate of 18.8 based on actual
reported fx for the 12-month period to 30 September 2021.

5.   Adjustment to reflect intercompany charges below EBITDAaL. Existing
intercompany arrangements will remain in place after closing.

6.   Converted from EGP to € at an average rate of 18.4 based on actual
reported fx for the 12-month period to 31 March 2021.

 

Goldman Sachs acted as financial advisor to Vodafone.

 

- ends -

 

For more information, please contact:

Investor
Relations
Media Relations

Investors.vodafone.com
Vodafone.com/media/contact

ir@vodafone.co.uk
GroupMedia@vodafone.com

Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14
2FN, England. Registered in England No. 1833679

 

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