Vodafone 2007 Annual Report Download - page 59

Vodafone Group Plc Annual Report 2007 57
In respect of Arcor, the Group’s non-mobile operation in Germany, the
capital structure provides all partners, including the Group, the right to
withdraw capital from 31 December 2026 onwards and this right in relation
to the minority partners has been recognised as a financial liability.
During the year, the Group entered into an agreement with the Essar Group,
conditional on the completion of the Group’s acquisition of a controlling
stake in Hutchison Essar. Under this agreement, the Essar Group was
granted two put options over its interest in Hutchison Essar that may result
in significant cash outflows for the Group (see page 136).
Off-balance sheet arrangements
The Group does not have any material off-balance sheet arrangements, as
defined by the SEC. Please refer to notes 30 and 31 to the Consolidated
Financial Statements for a discussion of the Group’s commitments and
contingent liabilities.
Quantitative and qualitative disclosures about
market risk
A discussion of the Group’s financial risk management objectives and
policies and the exposure of the Group to liquidity, market and credit risk is
included within note 24 to the Consolidated Financial Statements.
valuation date, by appraisal. If an initial public offering takes place and the
common stock trades in a regular and active market, the market value of
the Company’s interest will be determined by reference to the trading price
of common stock.
In conjunction with the acquisition of Hutchison Essar, the Group entered
into a share sale and purchase agreement with a Bharti group company
regarding the Group’s 5.60% direct shareholding in Bharti Airtel. On 9 May
2007, a Bharti group company irrevocably agreed to purchase this
shareholding and the Group expects to receive $1.6 billion in cash
consideration for such shareholding by November 2008. The shareholding
will be transferred in two tranches, the first before 31 March 2008 and the
second by November 2008. Following the completion of this sale, the Group
will continue to hold an indirect stake of 4.39% in Bharti Airtel.
Potential cash outflows
In respect of the Group’s interest in the Verizon Wireless partnership, an
option granted to Price Communications, Inc. by Verizon Communications
Inc. was exercised on 15 August 2006. Under the option agreement, Price
Communications, Inc. exchanged its preferred limited partnership interest in
Verizon Wireless of the East LP for 29.5 million shares of common stock in
Verizon Communications Inc. Verizon Communications Inc. has the right,
but not the obligation, to contribute the preferred interest to the Verizon
Wireless partnership, diluting the Group’s interest. However, the Group also
has the right to contribute further capital to the Verizon Wireless
partnership in order to maintain its percentage partnership interest. Such
amount, if contributed, would be $0.9 billion.
Performance