Vodafone 2014 Annual Report Download - page 17

Why sell our stake?
We have had a very successful 14 year investment in Verizon Wireless.
During this time its service revenue has quadrupled to US$69 billion,
its EBITDA has grown from US$6 billion in 2001 to US$34 billion
in 2013, and we received nearly US$16 billion of income dividends.
This investment has clearly created a great deal of value for Vodafone
shareholders. The sale not only crystallised the value of this signicant
asset, it has also enabled us to realise that value at a very attractive price,
representing around nine times Verizon Wireless EBITDA and 13 times
operational cash ow.
What will the sale enable us to do?
We carefully considered how to make best use of the sale proceeds
and we decided to retain a proportion of the cash received to allow
us to invest in the business and to reduce net debt, and we returned
US$85 billion to shareholders.
Project Spring, our new investment programme, will improve the quality
of our networks, products and services in our major markets, relative
to our competitors. Project Spring is in addition to our existing capital
expenditure programme and will bring total investment over the next
two years to around £19 billion.
This will amount to the largest and fastest period of investment in our
history. We have used the retained proceeds to reduce our net debt
signicantly and as a result the Company is much more resilient
going forwards.
What’s the shareholder return?
We have a track record of making signicant returns to shareholders–
with almost £23billion returned in the last three years alone in the form
of dividends and share buybacks. Consistent with that track record,
we also returned a large proportion of the net proceeds from the sale
of our interest in Verizon Wireless– 71% or US$85 billion (£51 billion)
comprising £37 billion worth of Verizon shares and £14 billion of cash,
during the year. As part of the transaction, we also consolidated our
shares – exchanging every eleven old Vodafone shares for six new
Vodafone shares.
Overall, we believe we have struck the right balance between investing
in the future of the Company and rewarding our shareholders for their
long-term support of our US strategy. Following the sale we have
reduced debt and established a bigger gap between our cash ow and
ordinary dividends paid. As a result, and as a sign of condence in the
future, we intend to continue to grow the dividend per share annually
going forward.
15Overview Strategy review Performance Governance Financials Additional information