Vodafone said Friday it would sell the 25 percent stake it holds in Belgian mobile operator Proximus back to Proximus’ parent company Belgacom for €2 billion ($2.5 billion).
said Friday it would sell the 25 percent stake it holds in Belgian mobile operator Proximus back to Proximus’ parent company Belgacom for €2 billion ($2.5 billion).
The proceeds of the proposed sale—which are subject to regulatory approvals—will be used to pay down debt.
In a statement, Vodafone CEO Arun Sarin said the move fits with Vodafone’s recently announced strategy of maximizing its returns and actively managing its portfolio, noting that the sale had taken place at an attractive price.
He also said that Vodafone does not see itself as the best long-term holder of Proximus. The carrier is Belgium’s largest mobile operator, with about 4.25 million customers, or a 48.5 percent share of the Belgian market.
The two companies have also signed a revised five-year partnership agreement that will offer Proximus customers preferred deals on Vodafone products such as Vodafone’s multimedia offerings for UMTS (universal mobile telecommunications system) wireless phones, mobile phone cards, and international roaming services.
They will also continue to work together on serving international corporate customers.
Slimming Down at Vodafone
The move fits in with Vodafone’s attempt to cut costs and develop a more unified strategy across all of its markets, according to Dan Bieler, research director with Ovum.
“Vodafone is struggling to control costs, and to do that you need to find synergies among the subsidiaries—but it’s hard to exploit those synergies if you cannot influence the strategy.”
Retaining minority stakes in other telecommunications carriers, which was popular in the wake of telecom deregulation, has fallen somewhat out of vogue in recent years. Companies see little sense in holding on to investments in which they have little voice, Mr. Bieler noted.
He expects Vodafone to also dispose of its 25 percent stake in Swisscom’s mobile unit, noting that the Swisscom chairman recently told analysts it would repurchase the stake at the right price.
Whether Vodafone will also dispose of its 45 percent share in the U.S. mobile carrier Verizon Wireless is less easy to answer. The fast-growing mobile unit may be a financial windfall for Vodafone, Mr. Bieler said, but that still leaves Vodafone virtually unknown as a brand in the United States.
Ovum believes Vodafone might leave the U.S. market for the right price. Vodafone’s shares inched up only slightly by 1.25 pence ($0.02) to 112.00 pence ($2.11) in trading on the London Stock Exchange.
Contact the writer:MBDamico@RedHerring.com