TIDMVOD
RNS Number : 8368R
Vodafone Group Plc
31 October 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Sale of Vodafone Spain
31 October 2023
Vodafone Group Plc ("Vodafone") announces that it has entered
into binding agreements with Zegona Communications plc
("Zegona")(1) in relation to the sale of 100% of Vodafone Holdings
Europe, S.L.U. ("Vodafone Spain") (the "Transaction").
-- On completion, Vodafone's consideration will comprise at
least EUR4.1 billion in cash and up to EUR0.9 billion in the form
of Redeemable Preference Shares ("RPS") which redeem, for an amount
comprising the subscription price and accrued preferential
dividend, no later than 6 years after closing
-- Vodafone and Zegona have entered into an agreement whereby
Vodafone will provide certain services to Vodafone Spain for a
total annual service charge of c.EUR110 million(2)
-- The enterprise value of EUR5.0 billion is equivalent to a
multiple of 5.3x Adjusted EBITDAaL(3) and 12.7x OpFCF(4) for the
12-month period ended 31 March 2023
Margherita Della Valle, Chief Executive of Vodafone, said:
"The sale of Vodafone Spain is a key step in right-sizing our
portfolio for growth and will enable us to focus our resources in
markets with sustainable structures and sufficient local scale. I
would like to thank our entire team in Spain for their dedication
to our customers and relentless determination to improve our
organic performance. However, the market has been challenging with
structurally low returns.
My priority is to create value through growth and improved
returns. Following the recently announced transaction in the UK,
Spain is the second of our larger markets in Europe where we are
taking action to improve the Group's competitiveness and growth
prospects."
Summary of Transaction terms
On completion, Vodafone's consideration will comprise at least
EUR4.1 billion in cash (subject to customary completion
adjustments) and up to EUR0.9 billion in the form of RPS. Zegona
has fully committed debt facilities of up to EUR4.2 billion
available to satisfy the cash consideration and intends to raise
equity via an institutional placing of new Zegona shares to
investors prior to completion of the Transaction, subject to market
conditions.
To the extent Zegona's equity raise prior to completion exceeds
EUR400 million, 50% of that excess will be paid to Vodafone in cash
at completion and the number of RPS received will be reduced
accordingly.
The RPS will be issued to Vodafone by a newly created entity,
EJLSHM Funding Limited ("FinCo"). FinCo will subscribe for new
ordinary shares in Zegona for an amount, based on the issue price
for Zegona's intended equity raise, that is equivalent to the
amount of RPS being subscribed for by Vodafone. The shares held by
FinCo will rank pari passu with Zegona's existing ordinary shares
and the ordinary shares to be issued pursuant to the equity raise.
At FinCo's option, the RPS may pay cash or accrue a compounding
dividend, at a fixed rate of 5% for each of the first 3 years, a
step up to 10% in year 4, a step up to 12.5% in year 5 and 15%
thereafter. FinCo will irrevocably undertake not to exercise its
voting rights in Zegona (other than in relation to a takeover of
Zegona). FinCo's sole purpose will be to redeem the RPS and it is
intended that the RPS will be redeemed 6 years after completion, or
earlier following a material liquidity event or exit for Zegona
that releases funds to its shareholders.
Completion of the Transaction is conditional on certain
approvals being obtained from current Zegona shareholders as well
as regulatory clearances and is expected to take place in the first
half of 2024. The Transaction is not subject to any minimum equity
raise by Zegona.
At completion, we will review the optimal use of proceeds in the
context of a broader capital allocation review.
Vodafone and Zegona will enter into a brand licence agreement,
which permits the use of the Vodafone brand in Spain for up to 10
years post-completion. Vodafone and Zegona will enter into other
transitional and long-term arrangements for services including
access to procurement, IoT, roaming and carrier services.
For more information, please contact:
Investor Relations Media Relations
Investors.vodafone.com Vodafone.com/news/contact-us
ir@vodafone.co.uk GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection, Newbury,
Berkshire RG14 2FN, England. Registered in England No. 1833679
Person responsible
The person responsible for arranging the release of this
announcement on behalf of Vodafone is Maaike de Bie Group General
Counsel and Company Secretary (Tel: +44 (0)1635 33251).
Advisers
In connection with the Transaction, Morgan Stanley, Robey
Warshaw and Evercore are acting as financial advisers to Vodafone
and Slaughter and May is acting as legal adviser to Vodafone.
Impact on Vodafone
Vodafone will deconsolidate Vodafone Spain from completion of
the Transaction. It is expected that the Transaction will have a
slightly accretive effect on Vodafone's adjusted earnings per share
and a dilutive effect on free cash flow.
Valuation multiple
12-month period ended 31 March
(EURm) 2023
Adjusted EBITDAaL(2,3) 947
Capex (552)
OpFCF4 395
Enterprise value 5,000
Enterprise value / Adjusted EBITDAaL(3) 5.3x
Enterprise value / OpFCF4 12.7x
About Vodafone Spain
Vodafone Spain is a mobile network operator providing mobile and
fixed line services to both consumer and business customers across
Spain. As at 31 March 2023, Vodafone Spain had gross assets of
EUR7.6 billion. For the 12-months period 31 March 2023, Vodafone
Spain generated a loss before tax of EUR383 million.
About Vodafone
Vodafone is the largest pan-European and African telecoms
company. Our purpose is to connect for a better future by using
technology to improve lives, digitalise critical sectors and enable
inclusive and sustainable digital societies.
Vodafone will continue to retain a significant presence in Spain
through the brand license agreement with Zegona and our European
R&D Centre in Málaga.
We provide mobile and fixed services to over 300 million
customers in 17 countries, partner with mobile networks in 46 more
and are also a world leader in the Internet of Things (IoT),
connecting over 160 million devices and platforms. With Vodacom
Financial Services and M-Pesa, we have the largest financial
technology platform in Africa, serving more than 56 million people
across six countries.
We are committed to reducing our environmental impact to reach
net zero emissions by 2040, while helping our customers reduce
their own carbon emissions by 350 million tonnes by 2030. We are
driving action to reduce device waste and achieve our target to
reuse, resell or recycle 100% of our network waste.
For more information, please visit www.vodafone.com , follow us
on X at @VodafoneGroup or connect with us on LinkedIn at
www.linkedin.com/company/vodafone .
About Zegona
Zegona was established in 2015 with the objective of investing
in businesses in the European TMT sector and improving their
performance to deliver attractive shareholder returns. Zegona is
led by former Virgin Media executives Eamonn O'Hare and Robert
Samuelson and is admitted to the standard listing segment of the
Official List and to trading on the Main Market of the London Stock
Exchange.
Notes to announcement
1. The selling entity is Vodafone Europe B.V. which is a 100%
owned subsidiary of Vodafone Group Plc. The buying entity is Zegona
Bidco, S.L.U. which is a 100% owned subsidiary of Zegona
Communications plc
2. The total annual service charge for each of the first two
years of c.EUR110 million primarily relates to charges already
included within the Adjusted EBITDAaL of Vodafone Spain
3. Adjusted EBITDAaL as defined in Non-GAAP measures on page 220
of the Vodafone Annual Report 2023
4. OpFCF defined as Adjusted EBITDAaL less capital expenditure
Important notice
Certain information contained in this document constitutes
"forward-looking statements", which can be identified by the use of
terms such as "may", "will", "should", "expect", "anticipate",
"project", "estimate", "intend", "continue", "target" or "believe"
(or the negatives thereof) or other variations thereon or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. Such statements
express the intentions, opinions, or current expectations of the
parties with respect to possible future events and are based on
current plans, estimates and forecasts, which the parties have made
to the best of their respective knowledge, concerning, among other
things, the respective business, results of operations, financial
position, prospects, growth and strategies, statements regarding
the transaction and the anticipated consequences and benefits of
the transaction, and the targeted closing date of the transaction.
Due to various risks and uncertainties, actual events or results or
the actual performance may differ materially from those reflected
or contemplated in such forward-looking statements.
Such risks and uncertainties include, but are not limited to,
regulatory approvals that may require acceptance of conditions with
potential adverse impacts; risks involving the parties' respective
ability to realise expected benefits associated with the
transaction; the impact of legal or other proceedings; and
continued growth in the market for telecommunications services and
general economic conditions in the relevant market(s).
Furthermore, a review of the reasons why actual results and
developments may differ materially from the expectations disclosed
or implied within forward-looking statements can be found under
"Forward-looking statements" and "Principal risk factors and
uncertainties" in the Vodafone Group Plc's annual report for the
year ended 31 March 2023.
No assurances can be given that the forward-looking statements
in this announcement will be realised. As a result, recipients
should not rely on such forward-looking statements. Subject to
compliance with applicable law and regulations, the parties
undertake no obligation to update these forward-looking statements.
No representation or warranty is made as to the reasonableness of
such forward-looking statements. No statement in this document is
intended to be nor may be construed as a profit forecast or
estimate for any period. Actual results could differ materially
from those expressed or implied.
This press release is for information purposes only and is not
intended to and does not constitute, or form part of, any
invitation or offer to sell, dispose, acquire, purchase or
subscribe for any securities of any companies mentioned herein in
any jurisdiction, whether pursuant to the transaction or otherwise.
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END
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