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Vodafone to acquire 15% equity stake in JAPAN TELECOM for 249 billion Yen

20 December 2000
Group Press Releases - 2000

Vodafone Group Plc (Vodafone) announces that it will acquire a 15% equity stake in JAPAN TELECOM CO.LTD. (JAPAN TELECOM) from two existing shareholders, West Japan Railway Company ("JR West") and Central Japan Railway Company (JR Central) for a consideration of ¥249 billion (£1.5 billion1). JAPAN TELECOM is one of Japanus leading telecommunications companies and parent of the fast-growing mobile network, J-Phone Communications Co. Ltd., and its regional wireless operating companies (collectively referred to as "the J-Phone Group").

Vodafone, which is already a shareholder in the J-Phone Group, will acquire an 8.6% stake in JAPAN TELECOM from JR West and a 6.4% stake from JR Central. Following completion of this transaction, JR West and JR Central, will hold 1.6% and 1.2% of JAPAN TELECOM, respectively. Vodafoneus resulting 15% interest will match the stakes in JAPAN TELECOM presently held by AT&T and BT. JR East will remain the largest shareholder with a 15.1% stake.

The consideration for the 15% stake in JAPAN TELECOM implies a total equity value of ¥1,662 billion (£10.1 billion), and a total enterprise value of ¥2,414 billion (£14.6 billion) with net debt, at 30 September 2000, of ¥753 billion (£4.6 billion.) The consideration of ¥249 billion represents a price per JAPAN TELECOM share of ¥2,600,000, which will be paid in cash, from Vodafoneus existing resources. The payment will be made in two equal tranches and it is expected the first payment will be made on 31 January 2001 and the second by the end of April 2001. The transaction is subject to regulatory approval.

Chris Gent, Chief Executive of Vodafone said, "This transaction demonstrates Vodafoneus confidence in the future of the Japanese telecoms market and the future prospects of JAPAN TELECOM and J-Phone, which we believe will be a powerful force in an increasingly competitive Japanese marketplace. JAPAN TELECOM and J-Phone have a well-deserved reputation for technical innovation and quality of service, and we are delighted to be involved as a partner in their future growth and development. We look forward to working together with existing JAPAN TELECOM partners, BT and AT&T and the JR companies, to achieve this end."

Commenting on the addition of Vodafone as a JAPAN TELECOM shareholder, Koichi Sakata, Chairman of JAPAN TELECOM, said, "Vodafone, through AirTouch International2, has been a valuable partner for 10 years. Vodafone brings to us its global leadership in mobile communications. The strengthening of our relationship with Vodafone through this transaction will give JAPAN TELECOM new access to global technology, content and expertise that will increase our ability to provide customers with quality and innovation, and strengthen our competitive position in Japan. This transaction also brings improved access to a global network, providing opportunities to expand the presence of Japanese technology, content and quality, such as data communication services, which we can provide as a result of the synergy of our mobile and fixed line businesses, around the world."

Vodafone, through AirTouch International, first partnered with JAPAN TELECOM in 1990 to offer national wireless telecom services. These services are now under the national brand of J-Phone. Vodafone has since maintained a strong commitment to the company by providing technical and business support to the development of the J-Phone Group business. Vodafone currently has over 20 professional staff seconded to J-Phone Communications and its three regional operating companies. As with its other business partners, Vodafone is committed to offering support and assistance to JAPAN TELECOM across its broad-based range of businesses, including domestic and international fixed line, mobile and data services.

In 1999, Vodafone reinforced its commitment by investing additional funds in J-Phone Communications to become its second largest shareholder after JAPAN TELECOM. Vodafoneus current equity ownership in J-Phone Communications is 26%. In addition Vodafone has direct holdings in the three J-Phone regional companies of between 10% and 14%.

UBS Warburg was the sole financial adviser in connection with this transaction.

About Vodafone

Vodafone Group Plc is the largest wireless operator in the world by subscribers, and has a presence in 25 countries across five continents. At the end of September 2000, Vodafone had approximately 65.5 million proportionate subscribers3 and approximately 117 million venture customers4.


About Japan Telecom

JAPAN TELECOM leads the next generation telecommunication infrastructure services in Japan, with innovations such as PRISM (nationwide IP-based backbone network), IMT-2000 (W-CDMA) mobile communications, and advanced local access networks (Fixed Wireless Access and ADSL). Striving to provide the best IP network solutions, JAPAN TELECOM constantly improves and upgrades its service quality to satisfy the needs of its customers in IT business promotion.

Through the J-Phone Group, JAPAN TELECOM has been at the leading edge of technology, with innovations such as: the launch of the first short messaging service in Japan, the launch of melody downloads to use as the ringing tone, the launch of colour screens on mobile phones, the launch of web access and the launch of camera phones.

For further information on JAPAN TELECOM and the J-Phone Group, please visit the website at www.japan-telecom.co.jp

About the Japanese telecommunications market

  • Japan is the world's second largest market for telecom services in terms of total industry revenues.
  • There are currently some 55.7 million cellular subscribers in the market out of a total population of 127 million. This implies a total cellular penetration of 43.9%.
  • Japan has the third largest cellular subscriber base in the world, falling behind only the US and China.
  • There are currently 3 2G operators in Japan, and 3 3G licences have been granted (via a beauty contest).
  • Japan has seen an extremely quick uptake of mobile internet services, with over 16 million subscribers signing on since launch in 1998.

    Contacts:


    Japan
    Vodafone
    Ron Boring, Vice President-Japan
    +81-3-5512-7225

    Gavin Anderson & Company
    Ross Rowbury, Deborah Hayden
    +81-3-5404-0640

    UK
    Vodafone Group Plc
    Tim Brown, Group Corporate Affairs Director
    Melissa Stimpson, Senior Investor Relations Manager
    +44-1635-33251

    Tavistock Communications
    Lulu Bridges
    +44-20-7600-2288

    UBS Warburg
    Mark Lewisohn, Managing Director
    Joint Global Head of Telecoms
    +44-20-7567-8000

    Footnotes:

    1 For purposes of translation, an exchange rate of 165 JPY/GBP has been used throughout this release.

    2 The original relationship with JAPAN TELECOM was established through Pacific Telesis International which became AirTouch International in 1994.

    3 On a proportionate basis i.e. based upon the percentage shareholding of Vodafone in each company.

    4 Venture customers ? represents the total subscriber base of each company in which Vodafone has an investment.

    press.office@vodafone.com