Source :PTI, Sep 8, 2010, 06.25pm IST
LONDON: Vodafone said it will offload its entire 3.2 per cent shareholding in China Mobile Ltd, a divestment that will fetch the British telecom major about 4.3 billion pounds.
Incidentally, Vodafone's announcement comes on a day when India's Bombay High Court ruled that Indian tax authorities had the right to demand taxes related to the company's 2007 acquisition of the Indian assets of Hong Kong-based Hutchison Telecom.
Regarding the China Mobile stake sale, Vodafone said in a statement that a major chunk of the proceeds from the transaction would be returned to the company's shareholders by way of a share buyback.
Going by reports, the British entity has been looking to sell its minority shareholding in many countries. Vodafone has a minority stake in its operations in Poland and France, among other countries.
The British entity will sell its 3.2 per cent stake in China Mobile, but both companies will continue with their commercial and technology cooperation. Vodafone's 3.2 per cent shareholding amounts to 642,868,587 shares.
"Vodafone expects the cash consideration to be approximately 4.3 billion pounds before tax and transaction costs," the statement noted.
According to the firm, 70 per cent of the deal proceeds would be utilised for a share buyback, while the remaining amount would be used to reduce the group's net debt.
In 2000, Vodafone had bought a 2.18 per cent stake in China Mobile and two years later, the shareholding was increased to 3.2 per cent.
"Today's transaction achieves a near doubling of Vodafone's original investment in China Mobile and combines our stated portfolio strategy with ongoing cooperation with China's leading telecommunications company," Vodafone CEO Vittorio Colao said.
"Both companies will continue this cooperation in areas such as roaming, network roadmap development, multinational customers and green technology," Vodafone added.
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