13th Dec 2005 10:48
Vodafone Group Plc13 December 2005 13 December 2005 ACQUISITION OF THE ASSETS OF TELSIM IN TURKEY Vodafone announces that it has agreed to acquire Telsim, the number two mobileoperator in Turkey, from the Turkish Savings Deposit and Investment Fund("SDIF") for a consideration of US$4.55 billion. Commenting on the transaction, Arun Sarin, Chief Executive of Vodafone, said: "We are delighted to have won the tender for Telsim. With a larger populationthan every European country except Germany, and a penetration level ofapproximately 53%, the Turkish market represents a major growth opportunity. Ourextensive operating experience and unique set of products and services positionsus to compete effectively in such a youthful market and deliver a superiormobile experience to Turkish customers." Principal benefits The acquisition of Telsim represents a unique opportunity to gain control of amobile business in one of the European region's biggest markets and isconsistent with Vodafone's strategy of increasing its exposure to growthmarkets. The principal benefits to Vodafone are: * Exposure to the attractive and growing Turkish market - Population of 72 million people - the fourth largest market in which Vodafone controls an operator - Market penetration of approximately 53% with significant further growth potential - Fast growing and young population, forecast to grow at 1.4% CAGR until 2010 and with approximately 47% under the age of 25 - Population expected to be greater than Germany's by 2017 * Full control of a fast growing number two mobile operator - 43% revenue growth in the first 7 months of 2005 compared to the same period in 2004 - Customer growth of 53% and 2.8 million net additional customers in the 12 months to 30 June 2005 - Approximately 9 million customers * Uniquely positioned to capture the benefits of a turnaround of Telsim - The business has historically been under-managed and suffered from under-investment in its network and customer propositions - Vodafone to leverage its position in GSM networks, branding and successful customer propositions to turnaround the business - Turkey's proximity to other Vodafone operations enables meaningful One Vodafone programme benefits including roaming opportunities from Turkish communities present in other Vodafone markets in Europe - Attractive corporate market opportunity Transaction overview Vodafone has agreed to acquire substantially all of the assets and business ofTelsim from the SDIF. Vodafone is not acquiring Telsim's liabilities, includingthose related to Motorola and Nokia, other than certain minor employee-relatedliabilities. In addition to the consideration price, Vodafone will be required to pay $0.4billion of VAT which will be recoverable against Telsim's future VATliabilities. Vodafone expects to recover this payment over the short to mediumterm and this has been included in Vodafone's valuation of Telsim. The transaction is subject to approval from the SDIF Board and Turkishregulatory, legal and competition authorities. Vodafone expects the transactionto close in the first quarter of calendar year 2006. Investing to capture future growth Vodafone intends to make a significant investment in the operations and networkof Telsim to deliver a superior product and service offering to the Turkishmarket. Vodafone expects that over the short term Telsim will requireapproximately US$1 billion of additional funding. The acquisition is expected to enhance Vodafone's revenue and EBITDA growthprofile, however Vodafone expects Telsim to make net losses in the short tomedium term as it invests in the network, building scale and a stronger customerand brand proposition. Consequently Vodafone expects the transaction to bedilutive to adjusted earnings per share in the short to medium term. The transaction is not expected to impact Vodafone's share purchase programme and is not expected to impact Vodafone's credit ratings. - ends - For further information: Vodafone Group Investor Relations Media RelationsTelephone: +44 (0) 1635 664447 Telephone: +44 (0) 1635 664444 Notes to Editors About Vodafone Vodafone is the world's leading mobile telecommunications group with operationsin 27 countries across 5 continents with 171 million proportionate customersworldwide as at 30 September 2005 as well as 27 partner networks. For furtherinformation, please visit www.vodafone.com. About Telsim All references to Telsim in the above release relate to substantially all of theassets and business of Telsim Mobil Telekomunikasyon Hizmetleri. Telsim is thenumber 2 GSM operator in Turkey. At 31 August 2005 it had 8.7 million customers.Telsim's market share was approximately 21.4% as of June 2005. In 2004 Telsimgenerated revenue and EBITDA of US$712m and US$87m respectively. All historicalinformation regarding Telsim has been extracted from Telsim's unauditedmanagement accounts. For further information please visit www.telsim.com. Important information Adjusted earnings per share represent earnings per share under IFRS before theresults of discontinued operations, non-operating income and expenditure, anditems not reflecting underlying business performance. Cautionary statement regarding forward looking - statements This press release contains certain "forward-looking statements" within themeaning of the US Private Securities Litigation Reform Act of 1995 with respectto Vodafone's expectations and plans, strategy, management's objectives, futureperformance, costs, revenues, earnings and other trend information, includingstatements relating to expected benefits associated with the transaction, planswith respect to the transaction, and expectations with respect to long-termshareholder value growth and the actions of credit rating agencies.Forward-looking statements are sometimes, but not always, identified by theiruse of a date in the future or such words as "anticipates", "aims", "due","could", "may", "should", "will", "expects", "believes", "intends", "plans","targets", "goal" or "estimates". By their nature, forward-looking statementsare inherently predictive, speculative and involve risk and uncertainty becausethey relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developmentsto differ materially from those expressed or implied by these forward-lookingstatements. These factors include, but are not limited to: regulatory and mergercontrol approvals that may require acceptance of conditions with potentialadverse impacts; risk involving our ability to realise expected synergies andbenefits associated with the transaction, including benefits associated with 3G,GPRS and Vodafone live!TM and other services; the impact of legal or otherproceedings; the risk that average revenues per users (ARPUs) may decline or maydecline more dramatically than expected; the risk that credit rating agenciesdowngrade or give other negative guidance with respect to our debt securitieswhich may increase our financing costs; and the risk that, upon completion ofthe transaction, we discover additional information relating to Telsim'sbusiness leading to unanticpated costs, charges or write-offs or with othernegative implications. In addition to the factors noted above, please refer to Vodafone's annualreports for additional factors, risks and uncertainties that could cause actualresults and developments to differ materially from the expectations disclosed orimplied within the forward-looking statements made herein. No assurances can begiven that they forward-looking statements in this release will be realised. Allwritten or oral forward-looking statements attributable to Vodafone Group Plc,any members of Vodafone Group or persons acting on our behalf are expresslyqualified in their entirety by the factors referred to above. Vodafone Group Plcdoes not undertake, and specifically disclaims, any obligation to update orrevise these forward-looking statements, whether as a result of new information,future developments or otherwise. Market data Economic and market data noted in the release has been obtained from publiclyavailable sources which Vodafone believes to be reliable; however Vodafone GroupPlc has not independently verified such information and makes no representationabout the accuracy of the information and, accordingly, undue reliance shouldnot be placed on the economic and market data in this release. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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