Vodafone 2002 Annual Report Download - page 11

Information on the Company Vodafone Group Plc 9Annual Report & Accounts and Form 20-F
approximately 1,046 million new ordinary shares to former Eircell shareholders in
consideration for their ownership interests. Eircell has subsequently been
renamed Vodafone Ireland plc.
Acquisition of an interest in Grupo Iusacell, S.A. de C.V. (“Grupo Iusacell”)
On 4 April 2001, the Group completed its acquisition of a 34.5% stake in Grupo
Iusacell, the second largest mobile operator in Mexico, for a cash consideration
of $973 million (£0.7 billion).
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
imposed regulatory restrictions. The Group has also undertaken a series of
transactions to facilitate the orderly disposal of such interests, as described
below.
Disposal of E-Plus Mobilfunk GmbH Pursuant to an undertaking given to the
European Commission in connection with the Company’s merger with AirTouch,
the Group divested its interest in E-Plus Mobilfunk GmbH. On 9 December 1999,
Bell South Corporation announced that, in accordance with the existing
agreements among the shareholders of E-Plus Mobilfunk GmbH, it had exercised
its right of first refusal to purchase the Group’s 17.24% interest. The sale to Bell
South completed on 4 February 2000 and the Group realised a profit on disposal
of approximately £0.9 billion.
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.
a) Disposal of interests in Atecs Mannesmann AG In April 2000,
Mannesmann reached an agreement with Siemens AG and Robert Bosch
GmbH for the sale of a controlling interest in Atecs Mannesmann AG, its
engineering and automotive business. The transaction valued Atecs
Mannesmann AG 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 pending transfer of a 50% plus two
shares stake in Atecs Mannesmann AG, which was completed on 17 April
2001, following approval from the relevant European and US regulatory
authorities. Atecs Mannesmann AG 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 Mannesmann AG to Siemens AG.
The proceeds from the disposal amounted to 13.66 billion (£2.2 billion),
and were received on 4 March 2002.
b) Disposal of Orange plc As a condition to its approval of the Company’s
acquisition of Mannesmann, the European Commission required Vodafone to
dispose
of as soon as practicable, its interest in Orange, one of four mobile
telecommunications operators in the United Kingdom. Mannesmann acquired
Orange in 1999 and Orange became a subsidiary of Vodafone 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. 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.
c) 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).
d) Disposal of Infostrada S.p.A. (“Infostrada”) Vodafone reached an
agreement for the sale of its interest in Infostrada S.p.A., Mannesmann’s fixed
line telecommunications operator in Italy, to Enel S.p.A. in October 2000.
Vodafone and Enel S.p.A. amended the terms of the agreement after the
Italian anti-trust authority approved the sale subject to the imposition of
certain conditions on Enel S.p.A. On 29 March 2001, Vodafone 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.
e) 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.
f) 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.