At last, an end to Vodafone’s French saga, and another chapter in the mobile operator’s continuing sell-off of assets that it does not control: Vodafone (NYSE: VOD) is selling its 44 percent stake in France’s SFR to Vivendi (EPA: VIV), its partner in the operation, for €7.75 billion (£6.8 billion; $11 billion), the company announced late on Sunday.
Upon completion of the transaction, expected in the second quarter of this year, Vodafone will also receive a dividend of €200 million (£176 million; $285 million), and it will enter into a “partner market agreement” to continue getting favorable rates for roaming agreements and other cross-border services.
In a release, Vodafone also noted that it would return £4 billion (€4.5 billion; $6.4 billion) of the net proceeds to shareholders by way of a share buyback. The remainder will be used to pay down debt.
The SFR sale — which apparently had been delayed because of disagreements between Vodafone and Vivendi on final price, while Vivendi has for years been tenaciously trying to gain full control of the operation — is the latest and biggest in a line of sell-offs for the operator, which is looking to focus its investments in operators where it has a controlling stake, and in operations that are still in strong growth phases. Before SFR, in November 2010, Vodafone sold its stake in Softbank back to the Japanese operator for $5 billion; and in September 2010 it sold its 3.2 percent stake in China Mobile for $6.5 billion.
The big question now is: what’s next? In Europe there is Polkomtel in Poland, in which Vodafone has a 24.4 percent stake that is thought to be worth around €4 billion (£3.5 billion; $5.7 billion), according to the Telegraph.
One regularly recurring bit of speculation is whether Vodafone might also sell off its 45 percent stake in Verizon Wireless (NYSE: VZ). That stake is thought to be worth around $50 billion.
Vodafone’s CEO Vittorio Colao was quoted just weeks ago saying that he saw no “no reason to divest this excellent company,” referring to Verizon Wireless. The U.S. operator has not paid a dividend since 2006, although it looks like one might be on the cards soon.
Given that Verizon Wireless’s network is CDMA-based and Vodafone’s is GSM-based, Vodafone’s interest in Verizon Wireless has been primarily a financial one. However, there may be potentially much more to gain from the partnership in future on handset and network procurement, and overall service development, as both operators move to LTE.
Meanwhile, Vodafone is continuing to build up its shareholdings in markets where it has a controlling interest, and it’s looking for controlling interests in those markets that still have room to grow. Last week, Vodafone paid $5 billion to increase its stake in Indian operator Essar to 75 percent.
SFR contributed £573 million to Vodafone’s adjusted operating profit in the financial year to 31 March 2010, said the operator.