LONDON-Vodafone Group plc has agreed to pay $6.9 billion total for British Telecommunications plc’s interests in Japan and Spain.
The sale includes BT’s 20-percent stake in Japan Telecom and its 20-percent stake in J-Phone Communications, JT’s mobile subsidiary, making Vodafone the largest shareholder of JT with a 45-percent interest, in addition to its 46-percent J-Phone holding. Vodafone will pay $5.3 billion for the Japanese stakes.
Vodafone said the Japanese sale gives it a stronger presence in the high-growth Japanese market. J-Phone is the country’s third-largest mobile carrier with nearly 10 million subscribers. Vodafone said it also will have greater exposure to third-generation services development in Japan, one of the most advanced 3G markets in the world, and will allow it to contribute to and benefit from JT’s operational performance.
Vodafone also will acquire BT’s 17.8-percent stake in Airtel, Spain’s second-largest wireless carrier, for $1.6 billion. Vodafone will hold about 91.6 percent of Airtel following the purchase.
The deal will reduce BT’s debt by $6.9 billion, an important shareholder concession for the debt-laden company.
“Our business activities in Japan have developed strongly, and we have built a successful and profitable relationship with Japan Telecom and J-Phone,” said Sir Peter Bonfield, chief executive officer of BT. “These are excellent companies, which we believe have a very good future. However, when Vodafone approached us with this offer, we felt that it represented such good value for our shareholders that it was right for us to accept it.
“At the same time, we had also been considering the most appropriate way for us to exit from Airtel, including the possibility of an IPO (initial public offering). The Vodafone offer gave us the opportunity to do so at an attractive valuation and with greater certainty than would have been possible with an IPO in current market conditions.”
Airtel shareholders had been considering an IPO for the carrier, but meetings to discuss the offering were postponed twice in April.
Vodafone plans to fund the transaction partly through a placing of new Vodafone shares, which is expected to raise about $4.3 billion, and pay the balance using Vodafone’s existing resources.
The acquisitions in Japan are expected to be completed by the end of August, and the Airtel acquisition is set for completion by the end of June.
The deal follows last week’s resignation of BT Chairman Sir Iain Vallance. He was replaced by Sir Christopher Bland.
Vodafone completed a 10-percent purchase of Japan Telecom from AT&T Wireless Services Group earlier in the week. Just a few weeks ago, BT negotiated options to buy 5-percent stakes in JT, giving the impression it planned to fight to maintain its hold in the Japanese market.
