Vodafone 2003 Annual Report Download - page 8

Vodafone Group Plc Annual Report & Accounts and Form 20-F 2003
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INFORMATION ON THE COMPANY Continued
On 10 January 2003, under an agreement with Mobitelea Ventures Limited, the
Group completed the purchase of a 5% indirect equity stake in the Group’s
Kenyan associated undertaking, Safaricom Limited (“Safaricom”), for
approximately $10 million (£7 million), increasing the Group’s effective interest in
Safaricom to 35%.
Sales of businesses
As a consequence of certain of the acquisitions described above, the Group also
acquired interests in companies that were either outside the Company’s core
business, or in which the Company was prevented from retaining interests due to
regulatory restrictions. The Group has also undertaken a series of transactions to
facilitate the orderly disposal of such interests, as described below.
Disposal of Mannesmann businesses
Following the acquisition of Mannesmann, the Group has completed the sale of a
number of Mannesmann businesses. The Group used the proceeds from these
divestments to reduce its indebtedness.
Disposal of interests in Atecs Mannesmann AG (“Atecs”)
In April 2000, Mannesmann reached an agreement with Siemens AG and Robert
Bosch GmbH for the sale of a controlling interest in Atecs, its engineering and
automotive business. The transaction valued Atecs at approximately 19.6 billion,
including pension and non-trading financial liabilities to be assumed on closing.
On 29 September 2000, a payment of approximately 13.1 billion (£1.9 billion)
plus interest was made to Mannesmann in exchange for the transfer of a 50%
plus two shares stake in Atecs, which was completed on 17 April 2001, following
approval from the relevant European and US regulatory authorities. Atecs also
repaid Group loans of 11.55 billion (£1.0 billion) in March 2001.
On 15 January 2002, Vodafone announced that it had exercised put options to
sell its remaining stake in Atecs to Siemens AG. The proceeds from this disposal
amounted to 13.66 billion (£2.2 billion), and were received on 4 March 2002.
Disposal of Orange
As a condition to its approval of the Company’s acquisition of Mannesmann, the
European Commission required the Group to dispose of its interest in Orange,
which Mannesmann acquired in 1999. Orange became a subsidiary of the
Company as a result of the Mannesmann acquisition. On 30 May 2000, the
Company and Mannesmann announced they had reached an agreement to sell
Orange to France Telecom. The transaction was completed on 22 August 2000,
following the receipt of conditional approval by the European Commission and
approval by the shareholders of France Telecom. The consideration comprised a
cash payment of approximately 121.4 billion (£13.2 billion), a 12.2 billion
(£1.4 billion) France Telecom loan note and 113,846,211 France Telecom
shares, representing 9.87% of the outstanding share capital of France Telecom.
France Telecom granted the Company put rights relating to the France Telecom
share consideration. In addition, France Telecom assumed Orange’s existing
debts, and its financial obligation regarding its UK 3G licence, totalling
£4.1 billion. The loan note was redeemed in March 2001 and realised proceeds
of £1.4 billion. The Group also renegotiated and exercised its put options over
France Telecom shares for a total value of approximately 111.6 billion
(£7.2 billion), of which 16.7 billion (£4.2 billion) was received in March 2001. On
19 April 2001, the remaining cash payment of 14.9 billion that was due to be
received from France Telecom in March 2002 was monetised for 14.7 billion
(£2.9 billion). The Group no longer holds any shares in France Telecom.
Disposal of Mannesmann tubes and watches businesses
On 9 October 2000, Mannesmann completed the sale of its tubes business to
Salzgitter for a nominal consideration. In the period prior to completion,
Mannesmann made capital contributions to the tubes business totalling 1271
million.
Mannesmann also completed the sale of Les Manufactures Horlogères, its luxury
watches business, to Richemont S.A. in December 2000, for a cash
consideration of approximately 11.8 billion (£1.1 billion).
Disposal of Infostrada
The Group reached an agreement for the sale of its interest in Infostrada,
Mannesmann’s fixed line telecommunications operator in Italy, to Enel S.p.A. in
October 2000. On 29 March 2001, the Group completed the sale of the entire
issued share capital of Infostrada to Enel S.p.A. and received total proceeds of
17.4 billion (approximately £4.7 billion). Enel S.p.A. also assumed Infostrada’s
net debt, including 10.8 billion (£0.5 billion) of debt owed to the Group that was
repaid on acquisition.
Disposal of Arcor rail business
On 25 January 2002, the Group announced that Arcor, the Group’s German fixed
line business, had agreed terms for the sale of its railway-specific business,
Arcor DB Telematik GmbH (“Telematik”), to the German rail operator Deutsche
Bahn, for 11.15 billion (£709 million), 11 billion of which was received on
26 March 2002. The sale completed in April 2002 following receipt of all
necessary approvals and registration in the German commercial register. On
completion, Arcor sold 49.9% of Telematik’s equity to Deutsche Bahn and
entered into a put / call arrangement governing the remaining 50.1% equity
interest, exercisable from 1 July 2002. Deutsch Bahn exercised its option to
purchase the remaining 50.1% equity interest on 1 July 2002.
Disposal of tele.ring Telekom Service GmbH (“tele.ring”)
On 8 May 2001, the Group announced that agreement had been reached to sell
its 100% equity stake in the Austrian telecommunications company, tele.ring, to
Western Wireless International Corporation. The transaction completed on
29 June 2001, following receipt of regulatory approval. The value of net assets
disposed of represented less than 1% of the Group’s net assets at the date
of disposal.
Disposal of holding in Ruhrgas AG
On 30 October 2001, the Group announced that it had reached agreement with
E.ON AG for the sale of the Group’s 23.6% stake in Bergemann GmbH, through
which it held an 8.2% stake in Ruhrgas AG. The transaction completed on 8 July
2002, realising cash proceeds of 10.9 billion.
Disposal of Shinsegi Telecom, Inc. (“Shinsegi”)
On 24 August 2001, the Group announced that agreement had been reached to
sell its 11.7% equity stake in the Korean mobile operator, Shinsegi, for an
undisclosed amount to SK Telecom, Ltd. The value of net assets disposed of
represented less than 1% of the Group’s net assets at the date of disposal.