Vodafone announces that it has entered into exclusive negotiations with the Rembrandt Trust (Pty) Limited ("Rembrandt Trust"), which are expected to result in Vodafone acquiring up to an additional 15% economic interest in Vodacom Group (Pty) Limited ("Vodacom") for a net cash consideration of up to R16.0 billion (£1.35 billion). This would increase Vodafone's effective shareholding in Vodacom from its current level of 35% up to 50%.
Principal benefits
An increased interest in Vodacom is consistent with Vodafone's strategy of increasing its exposure to growth markets.
The principal benefits to Vodafone would be:
- Increased exposure to the attractive and growing South African market
- market penetration approximately 57% with further growth potential
- population of approximately 47 million
- largest economy in Africa with forecast GDP growth of 9% - Increased exposure to other African growth markets including Democratic Republic of Congo, Tanzania, Lesotho and Mozambique
- Increased exposure to Vodacom, an attractive asset with:
- 17.2 million customers, 14.3 million in South Africa as at 30 June 2005
- revenue growth of 20% in the 12 months to 31 March 2005
- EBITDA growth of 24% in the 12 months to 31 March 2005
- implied 3.2% historic dividend yield
Transaction overview
Vodafone has entered exclusive negotiations with the Rembrandt Trust to purchase the 35.5 million "B" ordinary shares ("B" Shares) in VenFin Limited ("VenFin") currently owned by the Rembrandt Trust at a price of R47.25 per "B" Share. VenFin's principal asset is a 15% stake in Vodacom.
Vodafone expects to conclude these negotiations shortly. This acquisition would give Vodafone a 46.5% voting interest and 8.0% economic interest in VenFin. Thereafter Vodafone intends to make an offer to the remaining shareholders of VenFin to acquire their ordinary shares in VenFin at R47.25 per ordinary share.
Assuming negotiations are completed, Vodafone will sell all the assets and liabilities in VenFin other than its 15% stake in Vodacom ("Surplus Assets") to a new company to be owned by existing Venfin shareholders for a consideration of R5.0 billion (£0.42 billion). The terms of this sale are subject to final contractual negotiations.
Prior to the sale of the Surplus Assets the total implied value of the offer for the entire share capital of VenFin is R21.0 billion (£1.77 billion) of which R1.7 billion (£0.14 billion) comprises the "B" shares and R19.3 billion (£1.63 billion) comprises the value of the ordinary share capital.
As a long-standing foreign investor in South Africa, Vodafone is committed to working with Telkom and Vodacom management to ensure that Vodacom continues to make a significant contribution to Black Economic Empowerment.
The transaction will be conditional, inter alia, on South African competition and other regulatory approvals and is expected to close in the first quarter of calendar year 2006.
The acquisition will have no impact on Vodafone's share purchase programme or Vodafone's credit ratings. Vodafone intends to acquire shares in VenFin in the market from today at up to R47.25.
For further information:
Vodafone Group
Investor Relations
Telephone: +44 (0) 1635 664447
Media Relations
Telephone: +44 (0) 1635 664444
Notes to Editors
About Vodafone
Vodafone is the world's leading mobile telecommunications group with operations in 27 countries across 5 continents with over 165 million proportionate customers worldwide as at 30 June 2005 as well as 14 partner networks. For further information, please visit www.vodafone.com.
About Rembrandt Trust
Rembrandt Trust controls 100% of the unlisted B Ordinary shares in VenFin. Johann Rupert is the director of the trust which also controls 100% of the unlisted B ordinary shares in South African listed investment company Remgro Limited. Rembrandt Trust also owns all the unlisted A ordinary shares of M&I, the company which provides management services to both VenFin and Remgro.
About Vodacom
Vodacom is a South African based pan-African cellular communications company providing GSM services to over 17 million customers in South Africa, Tanzania, Lesotho, Mozambique and the Democratic Republic of Congo. Vodacom's South African operations also offer a UMTS or 3G service. Vodacom is currently owned by Telkom 50%, Vodafone 35% and VenFin 15%. For further information, please visit www.vodacom.co.za.
About Telkom
Telkom is one of the largest companies in South Africa. Telkom provides integrated communications solutions to a range of customers with fixed-line voice and data services, branded as Telkom, and mobile communications services through a 50% shareholding in Vodacom. For further information, please visit www.telkom.co.za.
About Venfin
VenFin is an investment holding company listed on the JSE, focused on investments in the telecommunication, technology, media, financial and risk services and other private equity businesses and start-up opportunities. For further information, please visit www.venfin.co.za.
Exchange Rate
For illustrative purposes an exchange rate of R11.86:£1 has been used.