8th Oct 2007 07:00
Vodafone Group Plc08 October 2007 6 October 2007 VODAFONE TO ACQUIRE TELE2'S BUSINESSES IN ITALY AND SPAIN Vodafone announces today that it has agreed to acquire Tele2 Italia SpA ("Tele2Italy") and Tele2 Telecommunication Services SLU ("Tele2 Spain") from Tele2 ABGroup for a cash consideration of €775 million (£537 million) on a debt freebasis. Tele2 Italy and Tele2 Spain provide nationwide fixed-line telecommunications andbroadband services. Tele2 Italy had over 2.6 million customers as at 30 June2007, including over 400,000 broadband customers, Tele2 Spain had 550,000customers as at 30 June 2007, including over 240,000 broadband customers. Key highlights of the transaction are: * Enables Vodafone to benefit from the attractive, high growth broadband markets in Spain and Italy, as penetration is increasing rapidly * Immediately delivers the infrastructure and broadband expertise necessary for a competitive broadband offering in two of Vodafone's key European markets * Capital expenditure requirements of Tele2 Italy and Tele2 Spain are not expected to materially impact the Group's ongoing capital intensity ratio in its Europe region * Meets Vodafone's stated financial investment criteria and is expected to be broadly neutral to adjusted earnings per share in the first full year after acquisition, excluding the impact of acquired intangible asset amortisation Commenting on the transaction, Arun Sarin, Chief Executive of Vodafone, said: "This acquisition is consistent with our strategy of meeting our customers'total communications needs. It will generate substantial time to market benefitsin Italy and Spain, where low broadband penetration and the market structuremake ownership of fixed broadband assets attractive. We have now established aclear route to delivering fixed broadband services in each of our major Europeanmarkets." Principal benefits The principal benefits of the transaction are: * Enables Vodafone to benefit from the attractive, high growth broadband markets in Spain and Italy: - Approximately 44% of households in Italy are expected to have broadband services by the end of the year, up from 30% two years ago - Approximately 57% of households in Spain are expected to have broadband services by the end of the year, up from 33% two years ago * Acceleration of Vodafone's total communications strategy in Italy and Spain by immediately delivering the infrastructure and broadband expertise necessary for a competitive DSL offering in two of Vodafone's key European markets * Exploits strong existing platforms in Spain and Italy: - The acquisition of unbundled networks enables Vodafone to benefit from the scale benefits and improved economics of asset ownership - In both countries, Tele2 offers local loop unbundling coverage to major cities, with the remaining nationwide coverage available through resale services - Vodafone plans to substantially increase local loop unbundling coverage within the next 12 months * Integration with existing Vodafone operations will significantly enhance Tele2 Italy and Tele2 Spain through: - Cost synergies arising from the use of existing network operations and infrastructure - Revenue synergies arising from cross-selling existing Vodafone products to the current customer base Financial impact on Vodafone The transaction meets Vodafone's stated financial criteria. The capital expenditure requirement of the acquired businesses is not expectedto have a material impact on the Group's ongoing capital intensity ratio in itsEurope region. The transaction is expected to be broadly neutral to adjusted earnings per sharein the first full year post acquisition, excluding the impact of acquiredintangible asset amortisation. Including this impact, the transaction isexpected to be approximately 1.5% dilutive to adjusted earnings per share in thefirst full year post acquisition. The transaction is not expected to have a material impact on the Group's 2007/08outlook statement and will have no impact on the Group's expectations for modestdividend growth in the near term. Further transaction details The transaction is expected to close by the end of the calendar year, followingthe receipt of regulatory approval. -ends- For further information: Vodafone GroupInvestor Relations Media RelationsTelephone: +44 (0) 1635 664 447 Telephone: +44 (0) 1635 664 444 Notes to Editors About Vodafone Vodafone is the world's leading international mobile communications group withoperations in 25 countries across 5 continents and 232 million proportionatecustomers at the end of June 2007, as well as 40 partner networks. For furtherinformation, please visit www.vodafone.com About Tele2 Tele2 is an alternative telecom operator and has 29 million customers in 18countries. Tele2 offers fixed and mobile telephony, broadband, data networkservices and cable TV. In 2006, Tele2 had operating revenue of €5.6 billion andreported an EBITDA of €0.6 billion. About Tele2 Italy Tele2 Italy has a customer base as at 30 June 2007 of more than 2.6 million, ofwhich over 400,000 are broadband customers, 33% of these on its unbundlednetwork. Tele2 Italy has approximately 4% of the Italian broadband market basedon number of customers and has been gaining market share over the past 18months. The company reported revenues of €546 million and EBITDA of •(6) millionfor the year ended 31 December 2006. In the six months ended 30 June 2007revenue grew 8.5% to €298m, driven by direct access and broadband, which grewover 200%. EBITDA reached break-even in the period. Tele2 Italy hasapproximately 100 employees. About Tele2 Spain Tele2 Spain has 550,000 customers as at 30 June 2007, of which approximately240,000 are broadband customers, 81% of these on its unbundled network. Tele2Spain currently has approximately 3.5% of the Spanish broadband market based onnumber of customers and has been gaining market share over the past 18 months.The company reported revenues of €253 million and EBITDA of •(21) million forthe year ended 31 December 2006. In the six months ended 30 June 2007 revenuewas overall constant year-on-year at €133m, but broadband revenue grew over100%. EBITDA was •(8) million in the period. Tele2 Spain has approximately 400employees. Cautionary statement regarding forward - looking statements This press release contains certain "forward-looking statements" within themeaning of the Private Securities Litigation Reform Act of 1995 with respect toour expectations and plans, strategy, management's objectives, futureperformance, costs, revenues, earnings and other trend information, includingstatements relating to expected benefits associated with the transactionscontemplated herein, expected capital expenditure requirements associated withthe transaction, the effect of the transaction on our adjusted earnings pershare, our expected realisation of cost and revenue synergies, and levels ofbroadband penetration in Italy and Spain in the near term.. Forward-lookingstatements are sometimes, but not always, identified by their use of a date inthe future or such words as "anticipates", "aims", "due", "could", "may","should", "will", "expects/expected", "believes", "intends", "plans", "targets","goal" or "estimates". By their nature, forward-looking statements are inherently predictive,speculative and involve risk and uncertainty because they relate to events anddepend 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 approvalsthat may require acceptance of conditions with potential adverse impacts; riskinvolving our ability to realise expected benefits associated with thetransactions referred to herein; our ability successfully to integrate theoperations of Tele2 Italy and Tele2 Spain with our own operations, the continuedgrowth in the market for broadband services in Italy and Spain and generaleconomic conditions in those regions. In addition to the factors noted above, please refer to documents Vodafone GroupPlc has filed with, or otherwise furnished to, the US Securities and ExchangeCommission (the "SEC") under the US Securities Exchange Act of 1934, includingthe Annual Report on Form 20-F for the year ended 31 March 2007 and subsequentlyfurnished Form 6-Ks (which are available at the SEC's Internet site (http://www.sec.gov), for additional factors, risks and uncertainties that could causeactual results and developments to differ materially from the expectationsdisclosed or implied within the forward-looking statements made herein. Noassurances can be given that the forward-looking statements in this release willbe realised. All written or oral forward-looking statements attributable toVodafone Group Plc, any members of Vodafone Group or persons acting on ourbehalf are expressly qualified in their entirety by the factors referred toabove. Vodafone Group Plc does not undertake, and specifically disclaims, anyobligation to update or revise these forward-looking statements, whether as aresult of new information, future developments or otherwise. Other matters This press release does not constitute, or form part of, any offer or invitationto sell, or any solicitation of any offer to purchase any security in anyjurisdiction, nor shall it (or any part of it) or the fact of its distributionform the basis of, or be relied on in connection with, any contract thereafter.Information in this press release about the yield on shares cannot be reliedupon as a guide to future performance. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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