Vodafone has announced an agreement to sell its entire 3.2% interest in China Mobile, clarifying that the two companies will continue their commercial and technology cooperation. Vodafone expects the cash consideration to be approximately £4.3bn before tax and transaction costs.
It is intended that approximately 70% of the net proceeds will be returned to shareholders by way of a share buyback, with the remainder used to reduce the Group’s net debt.
Vodafone has agreed to sell its entire shareholding of 642,868,587 shares in China Mobile by way of an accelerated bookbuilt offering. Goldman Sachs, Morgan Stanley and UBS are acting as Lead Managers and Bookrunners.
Vodafone's sale of its stake for nearly double the original price has, according to Reuters, caused China Mobile's shares to drop 4%. However, the Chinese operator's overall performance is likely to be unaffected.
Since Vodafone made its original investment in China Mobile in 2000, both companies have enjoyed a strong relationship and cooperated closely in many areas of business and in the development of the mobile industry. Following today's announcement, both companies will continue this cooperation in areas such as roaming, network roadmap development, multinational customers and green technology.
Commenting on the transaction, Vittorio Colao, Chief Executive of Vodafone said: “Today’s transaction achieves a near doubling of Vodafone’s original investment in China Mobile and combines our stated portfolio strategy with ongoing cooperation with China’s leading telecommunications company.”
The sale has confirms suspicions regarding Vodafone's plans in China, and as the operator narrows its focus to key European and Asian markets, it is expected to begin selling off other minority holdings.