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26 Vodafone Group Plc Annual Report 2011
Verizon Wireless
In the US, our associate Verizon Wireless has
continued to perform strongly. Organic service
revenue increased by 5.8%(*) led by a 3.1% increase
in the customer base to 88.4 million and strong data
revenue growth driven by increased smartphone
penetration. Verizon Wireless launched 4G LTE
services in December 2010 and began distribution
of the iPhone on its network in February 2011.
Generate liquidity or free cash flow
from non-controlled interests
Non-controlled interests constitute around 40% (based on third
party estimates) of the value of the Group’s assets. We aim to
maximise the value of these interests either by generating
liquidity or increasing free cash ow in order to fund protable
investment and enhance shareholder returns.
Verizon Wireless
Verizon Wireless is our largest non-controlled interest, in which
we have an equity interest of 45%. It is the revenue market leader
in the US and performed strongly this year with service revenue
growth of 5.8%(*). To create additional value we are working
closely with Verizon Wireless on several initiatives that leverage
our combined scale and scope including purchasing of network
equipment, IT and services, technology enhancements and
propositions for multinational companies. We received around
£1.0 billion in dividends this year, in relation to tax related
dividend receipts (see “Dividends from associates and to non-
controlling shareholders” on page 48 for further information),
which was substantially less than our proportionate share of
Verizon Wireless’ free cash ow which shows the material
opportunity for incremental returns.
Polkomtel
Polkomtel trades as Plus in Poland and is a leading operator in
Poland. Along with the four other owners we are exploring
options for a sale of the business.
Bharti Airtel
Bharti is the market leader in India. Following the purchase of
our controlling interest in Vodafone Essar in India in 2007, we
sold 5.6% of our stake in Bharti in 2008 and retained a 4.4%
indirect interest.
Sale of interests
In September 2010 we sold our 3.2% interest in China Mobile
Limited for £4.3 billion. In November 2010 we sold our interests
in SoftBank of Japan for £3.1 billion and approximately half of
the proceeds have been received to date and used to reduce
the Group’s net debt. The remaining proceeds are expected to
be received in April 2012. In April 2011 we announced the sale
of our 44% interest in SFR, the second largest mobile operator
in France, for £6.8 billion. The transaction, which is subject to
competition authority and regulatory approvals, is expected to
complete during the second calendar quarter of 2011.
Proceeds from the sale of all of these interests are being used
to reduce net debt and committed to a £6.8 billion buyback of
our shares of which £2.6 billion has been completed to date.
39%
Group adjusted
operating prot from
Verizon Wireless
(2010: 36%)