Vodafone Group Plc

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#1
Vodafone to realise US$130 billion for its 45% interest in Verizon Wireless

02 September 2013

Download the full press release here

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

US$84 BILLION EXPECTED RETURN TO SHAREHOLDERS
£6 BILLION ORGANIC INVESTMENT PROGRAMME TO ENHANCE NETWORK AND SERVICE LEADERSHIP
Key highlights

Vodafone announces that it has reached agreement to dispose of its US group whose principal asset is its 45% interest in Verizon Wireless (“VZW”) to Verizon Communications Inc. (“Verizon” – NYSE: VZ), Vodafone’s joint venture partner, for a total consideration of US$130 billion (£84 billion).
The consideration1 comprises:
US$58.9 billion (£38.0 billion) in cash;
US$60.2 billion (£38.9 billion) in Verizon shares2;
US$5.0 billion (£3.2 billion) in the form of Verizon loan notes;
US$3.5 billion (£2.3 billion) in the form of Verizon’s 23% minority interest in Vodafone Italy; and
US$2.5 billion (£1.6 billion) through the assumption by Verizon of Vodafone net liabilities relating to the US Group.
The VZW Transaction represents an attractive valuation of 9.4x EV / LTM EBITDA and 13.2x EV / LTM OpFCF.
Vodafone intends to implement a new organic investment programme, Project Spring, to establish further network and service leadership through additional investments of £6 billion over the next three financial years.
At completion, Vodafone shareholders are expected to receive all the Verizon shares and US$23.9 billion of cash (the “Return of Value”) totalling US$84.0 billion (£54.3 billion), equivalent to 112p per share and representing 71% of the Net Proceeds.
Vodafone expects that strong free cash flow generation will continue to underpin shareholder returns. The Board, therefore, intends to increase the total 2014 financial year dividend per share by 8% to 11p, and intends to grow it annually thereafter.
Subject to the satisfaction of certain conditions precedent, the Transactions are expected to complete in Q1 2014.

Vodafone is involved in another 100B+ deal. This time, it is the seller.

with the windfall from the sale of Verizon Wireless and the better outlook of European crisis, is Vodafone's current valuation cheap enough to warrant a buy?

sale of Verizon Wireless: US$130 B
market cap of Vodafone: US$154B(from yahoo finance, as of writing)

Vodafone has significant and profitable(before impairment) business in west Europe(Germany/UK, etc) and emerging markets(South Africa/India, etc) and south Europe(Italy/Spain, etc).

btw, there is no withholding tax for Vodafone's dividends. yield is around 5%, comparable to local telecom peers.
Reply
#1
Vodafone to realise US$130 billion for its 45% interest in Verizon Wireless

02 September 2013

Download the full press release here

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

US$84 BILLION EXPECTED RETURN TO SHAREHOLDERS
£6 BILLION ORGANIC INVESTMENT PROGRAMME TO ENHANCE NETWORK AND SERVICE LEADERSHIP
Key highlights

Vodafone announces that it has reached agreement to dispose of its US group whose principal asset is its 45% interest in Verizon Wireless (“VZW”) to Verizon Communications Inc. (“Verizon” – NYSE: VZ), Vodafone’s joint venture partner, for a total consideration of US$130 billion (£84 billion).
The consideration1 comprises:
US$58.9 billion (£38.0 billion) in cash;
US$60.2 billion (£38.9 billion) in Verizon shares2;
US$5.0 billion (£3.2 billion) in the form of Verizon loan notes;
US$3.5 billion (£2.3 billion) in the form of Verizon’s 23% minority interest in Vodafone Italy; and
US$2.5 billion (£1.6 billion) through the assumption by Verizon of Vodafone net liabilities relating to the US Group.
The VZW Transaction represents an attractive valuation of 9.4x EV / LTM EBITDA and 13.2x EV / LTM OpFCF.
Vodafone intends to implement a new organic investment programme, Project Spring, to establish further network and service leadership through additional investments of £6 billion over the next three financial years.
At completion, Vodafone shareholders are expected to receive all the Verizon shares and US$23.9 billion of cash (the “Return of Value”) totalling US$84.0 billion (£54.3 billion), equivalent to 112p per share and representing 71% of the Net Proceeds.
Vodafone expects that strong free cash flow generation will continue to underpin shareholder returns. The Board, therefore, intends to increase the total 2014 financial year dividend per share by 8% to 11p, and intends to grow it annually thereafter.
Subject to the satisfaction of certain conditions precedent, the Transactions are expected to complete in Q1 2014.

Vodafone is involved in another 100B+ deal. This time, it is the seller.

with the windfall from the sale of Verizon Wireless and the better outlook of European crisis, is Vodafone's current valuation cheap enough to warrant a buy?

sale of Verizon Wireless: US$130 B
market cap of Vodafone: US$154B(from yahoo finance, as of writing)

Vodafone has significant and profitable(before impairment) business in west Europe(Germany/UK, etc) and emerging markets(South Africa/India, etc) and south Europe(Italy/Spain, etc).

btw, there is no withholding tax for Vodafone's dividends. yield is around 5%, comparable to local telecom peers.
Reply
#2
I'm vested in VOD's UK shares (cos I want exposure to sterling pounds too lol).

There's also endless talk that AT&T may consider buying out VOD entirely. And VOD's CEO Colao is also open to any takeovers, which is a good sign.

My only worry is when VOD pays out it's windfall VZ-buyout monies, they might pay in both cash and Verizon shares. I don't know how complicated it might be for me to receive US shares as dividends, whether I have to fill forms or not.
Reply
#2
I'm vested in VOD's UK shares (cos I want exposure to sterling pounds too lol).

There's also endless talk that AT&T may consider buying out VOD entirely. And VOD's CEO Colao is also open to any takeovers, which is a good sign.

My only worry is when VOD pays out it's windfall VZ-buyout monies, they might pay in both cash and Verizon shares. I don't know how complicated it might be for me to receive US shares as dividends, whether I have to fill forms or not.
Reply


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