Confirming reports, British telecom giant Vodafone plc (VOD,VOD.L) Wednesday said it has agreed to sell its entire 3.2% interest in China Mobile Limited for GBP 4.3 billion, or $6.6 billion, before tax and transaction costs. Vodafone will continue its commercial and technology cooperation with China Mobile.
Vodafone has agreed to sell its 642.87 million shares in China Mobile through an accelerated bookbuilt offering. Goldman Sachs, Morgan Stanley and UBS are acting as Lead Managers and Bookrunners.
The sale, part of Vodafone's new strategy to exit non-strategic minority investments, had attracted media attention on Tuesday.
China Mobile is 74% held by state-owned China Mobile Communications Corp., through its 100% ownership company China Mobile (HK) Group Limited, which holds the stake. It is the world's largest mobile operator by market capitalization and subscriber numbers.
Vodafone expects to return around 70% of the net proceeds from the sale to shareholders by way of a share buyback, while the remainder will be used to reduce the Group's net debt.
According to Vodafone, since its original investment in China Mobile in 2000, both companies have enjoyed a strong relationship and cooperated closely in many areas of business as well as in the development of the mobile industry. Both companies will continue this cooperation in areas such as roaming, network roadmap development, multinational customers and green technology.
Commenting on the transaction, Vittorio Colao, Chief Executive of Vodafone said, "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."
Vodafone, which is aiming to slim down, is also said to be reviewing its 44% holdings in French mobile operator SFR, as well as its 45% stake in Verizon Wireless as it is yet to receive a dividend on the investment it made in Verizon in 2005.
Vodafone is also priming to sell off most of its other minority stakes, including its 24% stake in Poland-based Polkomtel, and return the proceeds to shareholders. The divestment strategy is in line with its objective of focusing on its core markets in Europe, Africa and India.
VOD.L closed Wednesday's regular trade at 159.90 pence, up 0.10 pence from the prior close, on 89.41 million shares.
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