Vodafone rings up £1.4bn from Belgacom deal

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The Independent Online

The telecoms giant Vodafone sold its 25 per cent stake in Proximus, the Belgian mobile phone operator, to Belgacom for €2bn (£1.35bn) yesterday, bringing to an end more than 18 months of negotiations between the two companies.

The deal gives Belgacom, Belgium's biggest telephone company, full control of Proximus - in which it already owned a 75 per cent stake - and will allow the company to create a package offering fixed line, mobile and broadband services in one.

Vodafone said it intends to use the proceeds to pay down its debt, adding that the deal will trigger a financial gain of around £450m.

As part of the deal, Vodafone has signed a new long-term partner agreement with Belgacom with an initial term of five years. This will ensure that customers of both companies continue to benefit from each other's services and discounted international roaming rates.

Arun Sarin, Vodafone's chief executive, said: "We have enjoyed a long and successful relationship with Belgacom, and together have built the leading mobile operator in Belgium. We do not, however, see ourselves as the most appropriate long-term holder of this minority stake. In line with our strategy of actively managing our portfolio and maximising returns, we have achieved an attractive price with this sale.

"I am also pleased our customers will continue to benefit from our products and services in Belgium through a renewed long-term agreement with Proximus."

Didier Bellens, Belgacom's president and chief executive, said: "Our strategy has always been to be a leader in all of our businesses. The agreement with Vodafone will allow us to strengthen the co-operation within our group, and respond to the market trend towards convergence by focusing on delivering fully integrated solutions to our customers. The group now has all the necessary assets to address the current market evolutions, while maintaining its leadership position in Belgium."

Analysts said Vodafone had achieved a good price for its stake in Proximus, equivalent to about 7.2 times the business's forecast earnings for the current financial year. Analysts at Dresdner Kleinwort pointed out the price was more than 50 per cent higher than Vodafone's own rating in spite of Proximus's falling revenues.

"Further associate disposals would further highlight the huge Vodafone share price undervaluation," the analysts said.

Shares in Vodafone rose 1.4 per cent, closing at 112.25p, giving the group a market value of £59bn. Shares in Belgacom, listed on the Brussels exchange, rose 0.9 per cent to €27.4 (£18.50), giving the business a market value of €9.9bn (£6.7bn).

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