Vodafone acquires 10% economic interest in Bharti Tele-Ventures for £850 million
October 28, 2005
NEWBURY, U.K. -- Vodafone announces that it has agreed to acquire, through wholly-owned subsidiaries, aneconomic interest of 10% in Bharti Tele-Ventures Limited (“BTVL”) (the “Transaction”) for a cashconsideration equivalent to Rs.66.56 billion (£0.82 billion).Commenting on the Transaction, Arun Sarin, Chief Executive of Vodafone, said:
“I am delighted to announce this strategic partnership with BTVL, the leading national mobileoperator in India. Together we will take this venture to a new level as clear leader in this market.We are entering a relationship with a major company which shares our vision and values andunderstands, as we do, the enormous potential of mobile telephony in society. This transaction isconsistent with Vodafone’s strategy of developing our global footprint in growth markets, where wecan create value for shareholders.”
Commenting on the Transaction, Sunil Bharti Mittal, Chairman and Group Managing Director ofBTVL, said:“We are delighted to have Vodafone as our additional partner to further develop the Indian telecommarket. It is a matter of great pride for all of us at Bharti that Vodafone has made its entry intoIndia by way of a partnership with Bharti. Today when Bharti stands on the threshold of being atelecom powerhouse, the partnership with Vodafone will help in achieving its vision of making Airtelthe most admired brand in India.”
The consideration paid is equivalent to a purchase price of Rs.351 per BTVL share and representsa 7.4% premium to the 5-day average share price of BTVL on 27 October 2005.Vodafone has entered into an agreement to acquire:
a 4.39% economic interest in BTVL through Bharti Enterprises Private Limited (“BhartiEnterprises”)
a 5.61% direct interest in BTVL from Warburg Pincus LLC (“Warburg Pincus”)
The Transaction is expected to be immediately enhancing to adjusted earnings per share and willhave no impact on Vodafone’s share purchase programme.The principal benefits of the Transaction to Vodafone are that it provides:
Expansion of Vodafone’s footprint into India, a large and under-penetrated market of globalimportance with significant growth potential
4th largest economy in the world in PPP-adjusted terms with a population of 1.1 billion
3rd largest mobile market in Asia with 65.1 million customers currently, after China andJapan where Vodafone is already present
mobile and fixed line penetration currently at approximately 6.0% and 4.4%, respectively
53.3% year-on-year mobile market growth, representing 22.6 million customer additions
Investment in the fastest growing mobile operator in Indiastrong and highly respected management team
14.1 million mobile customers as at 30 September 2005, equivalent to a 21.8% customermarket share
one of only three Indian mobile operators with a nationwide footprint
in the six months ended September 2005, BTVL’s mobile business delivered year-on-yeargrowth of 62% in customers, 58% in revenues and 64% in EBITDA
in the six months ended September 2005, BTVL’s fixed line business delivered year-onyeargrowth of 39% in customers, 30% in revenues and 34% in EBITDA
Active role in the partnership
the Transaction delivers material rights in BTVL as a result of which Vodafone is expectedto proportionately consolidate BTVL
Vodafone will have the right to appoint two directors to the BTVL Board
The acquisition of shares from Warburg Pincus is not subject to regulatory approval and isexpected to close by the end of November 2005.
The acquisition of shares in Bharti Enterprises is conditional on receipt of all necessaryunconditional regulatory approvals and certain customary conditions. The economic closing of thispart of the Transaction is expected to occur in the first quarter of the calendar year 2006.
Vodafone Group plc
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