UK mobile company Vodafone has agreed to sell its 25% interest in Proximus to Belgacom for 2 billion euros in cash.
Belgacom already owns 75% of Proximus, which is the top mobile operator in Belgium. Belgacom is the largest telecommunications company in Belgium.
Vodafone and Proximus have also signed a revised long-term partner network agreement in Belgium with an initial five-year term. The agreement will allow customers of both companies to use Vodafone services in Belgium. In addition, the two companies will continue to co-operate in serving international corporate customers.
Vodafone CEO Arun Sarin commented: "We have enjoyed a long and successful relationship with Belgacom, and together have built the leading mobile operator in Belgium. We do not, however, see ourselves as the most appropriate long-term holder of this minority stake.
"In line with our strategy of actively managing our portfolio and maximising returns, we have achieved an attractive price with this sale. I am also pleased that our customers will continue to benefit from our products and services in Belgium through a renewed long-term partner network agreement with Proximus."
The sale is subject to certain regulatory approvals and is expected to close before 31 December 2006. The sale proceeds will be used to reduce Vodafone`s net debt.
Vodafone, which has a 50% stake in SA operator Vodacom, said the transaction will not materially affect its proportionate mobile revenue and earnings before interest, taxes, depreciation and amortisation outlook for the financial year ending 31 March 2007.
However, the company will no longer receive anticipated dividend income from Proximus of lb150 million this year. As such, there will be a corresponding reduction in the group`s free cash flow outlook for the financial year to end March 2007.
As a result of the transaction, Vodafone anticipates recording a gain on disposal of about lb0.45 billion in its results for the next financial year.
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