Vodafone, the UK mobile phone company, on Friday agreed to sell its 25 per cent stake in Proximus, the Belgian mobile phone company, to co-owner Belgacom for €2bn ($2.6bn).
The sale is the third asset Vodafone has sold since deciding that it would bail out of some mature markets in which it was not a market leader or held a minority stake, in favour of expanding in more promising ones. Vodafone sold its Swedish business to Norway’s Telenor last November for €1bn, and earlier this year sold its Japanese unit to Softbank, the Japanese internet and telecoms conglomerate for Y1,800bn ($15.4bn). Late last year, it bought Turkey’s mobile phone company Telsim, for $4.55bn in a clear sign that it was committed to growth markets.
While competition in Belgium is not as fierce as in Germany or France, Vodafone’s minority stake in Proximus was too small to generate significant earnings and Vodafone had little hope of ever getting control of Proximus, said Dirk Saelens, an analyst with KBC in Belgium.
Vodafone expects to record a £450m ($849m) gain on the sale in 2007, when it will use the money to cut its debt.
“The sale of the Proximus stake is a reflection of Vodafone’s ongoing process of getting out of its less strategic assets, and in this case where they did not own enough to control the business’s destiny, it made sense to divest,” said Ben Wood, an analyst and director at Collins Consulting, a boutique telecoms advice company.
Analysts said the price was fair, with Belgacom paying just over seven times 2006 cashflow for the stake. Mobistar, another Belgian telecoms company, is trading at 6.6 times cash flow.
“If you just look at other recent deals and the fact that many telecoms companies are trading on multiples of 7.5 to 8 times cashflow now, it’s clear this is a reasonable price,” said KBC’s Mr Saelens.
Analysts said Vodafone has several other stakes that may now be on the block, particularly after a May statement about the future strategy of the company in which Arun Sarin, Vodafone’s chief executive, said the company’s portfolio was under review.
