Form 6-K VODAFONE GROUP PUBLIC For: Mar 15
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULES 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Dated
March 15, 2024
Commission
File Number: 001-10086
VODAFONE GROUP
PUBLIC LIMITED COMPANY
(Translation
of registrant’s name into English)
VODAFONE
HOUSE, THE CONNECTION, NEWBURY, BERKSHIRE, RG14 2FN,
ENGLAND
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F ✓
Form 40-F _
This
Report on Form 6-K contains a Stock Exchange Announcement dated 15
March 2024 entitled ‘Sale of Vodafone Italy and capital
return’.
Vodafone Group Plc ⫶ News
release
15 March 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
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Reshaped European footprint, €8bn sale of Vodafone Italy
& €4bn capital return
Vodafone Group Plc ("Vodafone") announces today the final step of
the portfolio right-sizing announced in May 2023, with a binding
agreement to sell 100% of its Italian operations ("Vodafone Italy")
to Swisscom AG ("Swisscom") (the "Transaction").1
● Reshaped
European footprint focused on growing markets, with strong
positions and local scale
● Value-creating
sale of Vodafone Italy to Swisscom for €8 billion upfront
cash proceeds
● Attractive
valuation, representing c.26x consensus OpFCF2 and
7.6x consensus Adjusted EBITDAaL2 for
FY24
● New
capital allocation framework, including dividend to be rebased to
4.5c per share from FY25 onwards, €4 billion capital return
via share buybacks and new leverage range of 2.25x -
2.75x
"Today, I am announcing the third and final step in the reshaping
of our European operations. Going forward, our businesses will be
operating in growing telco markets - where we hold strong positions
- enabling us to deliver predictable, stronger growth in Europe.
This will be coupled with our acceleration in B2B, as we continue
to take share in an expanding digital services market.
The sale of Vodafone Italy to Swisscom creates significant value
for Vodafone and ensures the business maintains its leading
position in Italy, which has been built through the dedicated
commitment of our colleagues to serving our customers over many
years.
Our transactions in Italy and Spain will deliver €12 billion
of upfront cash proceeds and we intend to return €4 billion
to shareholders via buybacks, as part of our broader capital
allocation review."
Margherita Della Valle
Group Chief Executive
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Reshaped European footprint
With the sale of Vodafone Italy and Vodafone Spain, together with
the merger of Vodafone UK and Three UK, Vodafone will now focus its
operations in Europe on growing markets, where we hold strong
positions with good local scale. All telecom markets within the new
geographic footprint have been growing over the last 3 years and we
will now accelerate our performance where we can create value. In
the near-term, the new footprint with the sale of Vodafone Spain
and Vodafone Italy, will also result in a step-up of Vodafone Group
ROCE of more than 1 percentage point.
The change in geographic footprint will not be the only shift for
Vodafone. As previously communicated, our biggest growth
opportunity is in B2B. Demand for digital services is strong and we
are particularly well positioned to support SMEs and Public Sector
customers, as their strategic partner in transitioning to the Cloud
and generative AI. Our B2B service revenue growth already reached
5% in Q3 FY24 and we are gaining share against all our primary
competitors. We intend to further strengthen our range of platforms
and capabilities through dedicated investments and new partnerships
(e.g. Microsoft). From 1 April 2024, our new IoT
company will
focus on extending our current global leadership position by
entering new markets and creating a platform-as-a-service offering
to support other telcos.
In Africa, we will continue to drive growth at attractive returns
through mobile connectivity, fixed connectivity and financial
services. In mobile, we are market leaders across our footprint. In
fixed, there is a significant opportunity to reach a wider share of
the population. Our leading FinTech platform is already serving
more than 75 million customers with double digit
growth.
Across the whole Group, we will continue to drive operational
excellence through our priorities of Customers, Simplicity and
Growth. Refocusing our resources towards improving our customers'
experience is already delivering improvements in customer
satisfaction and increasing customer loyalty. We will also continue
to simplify our operations and execute on our cost programmes to
improve productivity.
To better serve our own markets and telecoms partners (such as
Swisscom in Italy and Zegona in Spain), from 1 April 2024, the
majority of our central operations will begin to move to a fully
commercial model. This programme is expected to complete in FY25
and allow us to respond flexibly and efficiently to changes in
demand. We are opening our platforms and services to third parties,
offering them the opportunity to access our shared operations such
as procurement, roaming, IoT and other business
platforms.
From 1 April 2024, we will also be changing our organisation to
better execute on our strategic priorities within the new
footprint. We will be organising ourselves in five business
divisions: Germany; European Markets; Africa; Vodafone Business;
and Vodafone Investments. The structure of the Vodafone Group
Executive Committee will change accordingly, and in this context,
Philippe Rogge will step down from his position as CEO Vodafone
Germany and will leave Vodafone. Further information is provided in
Appendix I.
Sale of Vodafone Italy transaction summary
Vodafone has entered into a binding agreement to sell Vodafone
Italy to Swisscom for an enterprise value of €8 billion. The
Transaction follows an extended period of engagement with several
counterparties to explore market consolidation options in Italy.
Highlights of the Transaction include:
● values Vodafone Italy at a multiple of c.26x
consensus OpFCF2 and
7.6x consensus Adjusted EBITDAaL2 for
FY24, representing a premium to the Group's trading
multiple;
● values
Vodafone Italy at the highest OpFCF2 multiple
of any Vodafone market transaction of the last 10
years;
● delivers
the best combination of value creation, transaction certainty and
upfront cash proceeds; and
● provides
Vodafone with a full exit from Italy, where it was not possible to
achieve ROCE in excess of cost of capital.
As part of the Transaction, Vodafone and Swisscom have agreed that
Vodafone will continue to provide certain services (the "Group
Services") to Swisscom for up to 5 years. The annual charge for the
Group Services to be paid by Swisscom to Vodafone for the first
year after completion is estimated at approximately €350
million, of which approximately €176 million reflect charges
currently reported below Vodafone Italy's segmental Adjusted
EBITDAaL.
Vodafone and Swisscom are also exploring a closer
commercial relationship to enable collaboration across a broad
range of areas, beyond Italy. The key areas of commercial
collaboration that Vodafone and Swisscom are exploring include
IoT, enterprise services and solutions, procurement,
operational shared services and roaming. This is aligned with
Vodafone's strategy to commercialise its shared operations and
broaden its partnerships.
The Transaction constitutes a Class 1 transaction for Vodafone
under the current UK Listing Rules and is, therefore, as at the
date of this announcement, conditional on Vodafone shareholders
passing a resolution approving the Transaction (the "Shareholder
Approval Condition"). As the UK Listing Rules are expected to
change in the summer of 2024 in a manner that would mean the
Shareholder Approval Condition is no longer required, the Parties
have agreed that should the UK Listing Rules be amended before 30
September 2024, then the Shareholder Approval Condition will no
longer apply. Completion is targeted in the first half of 2025. The
Board of Vodafone has unanimously approved the Transaction and each
of Vodafone's Directors who hold shares have agreed to enter into a
customary irrevocable undertaking to vote in favour of any
resolution to approve the Transaction.
The Transaction is also conditional on certain regulatory
approvals, including clearance by the Italian Competition
Authority. The Transaction is not conditional on the approval of
Swisscom's shareholders.
Vodafone has further agreed that, if the approval of Vodafone's
shareholders is required and the Transaction is not approved at any
such General Meeting, and Vodafone subsequently enters into an
agreement for an alternative transaction involving Vodafone Italy
within 12 months, Vodafone shall pay Swisscom a break fee of
€150 million.
Capital allocation review
Vodafone has conducted a broad capital allocation review,
considering the investment profile of the Group's strategy within
its reshaped footprint. This review has concluded the following key
outcomes:
● country-level
capital intensity to be broadly maintained at existing
levels;
● maintain robust balance sheet with new leverage
policy of 2.25x - 2.75x Net debt to Adjusted EBITDAaL, targeting to
be in bottom half of the range;
● FY24
total ordinary dividend expected to be maintained at 9.0c per share
and ordinary dividend to be rebased to 4.5c per share from FY25
onwards;
● targeting
total return increase to €3.1 billion for FY25, comprising
€1.1 billion ordinary dividends and up to €2.0 billion
share buybacks following completion of the sale of Vodafone Spain;
and
● opportunity
for further share buybacks of up to €2.0 billion following
completion of the sale of Vodafone Italy.
The total net cash proceeds from the sale of Vodafone Spain and
Vodafone Italy are expected to be approximately €12 billion,
subject to customary closing adjustments. Following an extensive
review of our capital investment requirements, the current capital
intensity will be broadly maintained by market, which allows for
appropriate investment in networks and growth opportunities. A new
leverage policy of 2.25x - 2.75x Net Debt to Adjusted EBITDAaL will
be adopted and we will target to operate within the bottom half of
this range. The new leverage policy supports a solid investment
grade credit rating and positions Vodafone to continue to invest
for growth over the long-term. Vodafone has a debt structure with a
weighted average life of 12 years, and fixed weighted average cost
below 3%.
Reflecting the composition of the Group for FY24, alongside
re-iterating FY243,4 guidance
of Adjusted EBITDAaL of c.€13.3 billion and Adjusted Free
Cash Flow of c. €3.3 billion, the Board's intention is to
maintain the final FY24 dividend in line with the prior year at
4.5c per share (annual total dividend: 9.0c per share). Following
the right-sizing of the portfolio as a result of the Transaction
and the sale of Vodafone Spain, the Board has determined to adopt a
new rebased dividend from FY25 onwards. The Board is targeting a
dividend of 4.5c per share for FY25, with an ambition to grow it
over time. The new dividend has been set at a sustainable level,
which ensures appropriate cash flow cover and sufficient
flexibility to invest in the business for
growth.
The Board has approved the capital return through share buybacks of
up to €2.0 billion of proceeds from the sale of Vodafone
Spain. This is expected to commence following completion of the
sale of Vodafone Spain. The Board anticipates the opportunity for
further share buybacks of up to €2.0 billion upon completion
of the sale of Vodafone Italy. It is expected that the total return
to shareholders for FY25 will be up to €3.1 billion,
representing €1.1 billion in ordinary dividend payments and
up to €2.0 billion in share buybacks. This represents a 23%
increase over the expected total returns to shareholders for FY24
of €2.5 billion.
Other information
Person responsible
The person responsible for arranging the release of this
announcement on behalf of Vodafone is Maaike de Bie, Group General
Counsel and Company Secretary (Tel: +44 (0)1635
33251).
About Vodafone Italy
Vodafone Italy is a mobile network operator providing mobile and
fixed line services to both consumer and business customers across
Italy. As at 31 March 2023, Vodafone Italy had gross assets of
€12.4 billion. For the 12-month period ended 31 March 2023,
Vodafone Italy generated a loss before tax of €(49) million.
Vodafone Italy is led by Aldo Bisio, Chief Executive Officer, and
Sabrina Casalta, Chief Financial Officer.
Valuation information
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12-month period ending 31 March 2024
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Consensus Adjusted EBITDAaL
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€1,325m
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Group services charges (reported below EBITDAaL)
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€(176)m
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Non-cash accounting gain5
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€(97)m
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Revised consensus Adjusted EBITDAaL2
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€1,052m
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Consensus Capex2
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€(747)m
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Revised consensus
OpFCF2
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€305m
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Enterprise value ("EV")
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€8,000m
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EV / Adjusted EBITDAaL2
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7.6x
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EV / OpFCF2
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26x
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Effect of the Transaction on Vodafone
The Transaction is expected to have a slightly accretive impact on
adjusted earnings per share and a dilutive impact on free cash
flow. However, the Board believes that the Transaction will support
the Group in driving improved performance through a focus on
customers, simplicity and growth in the years ahead.
Advisers
In connection with the Transaction, UBS is acting as sole financial
adviser to Vodafone. Slaughter and May and ADVANT NCTM are acting
as corporate legal advisers to Vodafone and Linklaters is acting as
antitrust legal adviser to Vodafone.
About Vodafone
Vodafone is the largest pan-European and African telecoms company.
We provide mobile and fixed services to over 300 million customers
in 17 countries, partner with mobile networks in 45 more and have
one of the world's largest IoT platforms. In Africa, our financial
technology businesses serve more than 76 million customers across
eight countries - managing more transactions than any other
provider.
Our purpose is to connect for a better future by using technology
to improve lives, businesses and help progress inclusive
sustainable societies. We are committed to reducing our
environmental impact to reach net zero emissions by
2040.
For more information, please visit www.vodafone.com,
follow us on X at @VodafoneGroup or connect with us on LinkedIn
at www.linkedin.com/company/vodafone.
About Swisscom
Swisscom is the leading ICT company in Switzerland and, with
Fastweb, a leading challenger in Italy. The company offers mobile,
Internet and TV, as well as comprehensive IT and digital services
to private and business customers. Swisscom is listed on the Swiss
Stock Exchange and is 51% owned by the Swiss
Confederation.
Footnotes
1.
The selling entity is Vodafone Europe B.V, which is a 100%
owned subsidiary of Vodafone Group Plc and the purchasing entity is
Swisscom Italia S.R.L which is a 100% owned subsidiary of Swisscom
AG.
2.
For the 12-month period ending 31 March 2024. Based on
company compiled consensus as at February 2024, after adjusting for
approximately €176 million of group services charges which
are not included in Adjusted EBITDAaL for the purposes of Vodafone
segmental reporting and €97 million of non-cash accounting
gains related to the sale of Vodafone Italy's towers to Inwit that
are included in Adjusted EBITDAaL. OpFCF is defined as Adjusted
EBITDAaL less capital expenditure.
3.
The FY24 guidance foreign exchange rates were: €1 :
GBP 0.88, €1 : ZAR 19.30, €1 : TRY 21.10, €1 :
EGP 33.38.
4.
Guidance for FY24 includes Adjusted EBITDAaL and Adjusted
free cash flow for Vodafone Italy and Vodafone Spain for the 12
months ending 31 March 2024.
5.
Non-cash accounting gain relates to the sale of Vodafone
Italy's tower assets to Inwit that are included in Adjusted
EBITDAaL.
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For more information, please contact:
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Investor Relations:
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investors.vodafone.com
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Media Relations:
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vodafone.com/media/contact
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Registered Office: Vodafone House, The Connection, Newbury,
Berkshire RG14 2FN, England. Registered in England No.
1833679
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A webcast Q&A session will be held at 10:00 GMT on 15 March
2024. The webcast and supporting information can be accessed
at investors.vodafone.com
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Appendix I ⫶ Vodafone Group
Executive Committee changes
Vodafone today announces a number of changes to its Executive
Committee, to be effective from 1 April 2024.
Ahmed Essam appointed Executive Chairman Vodafone Germany and CEO
European Markets
Ahmed will take on responsibility for our markets across Europe,
including the UK, Albania, Czech Republic, Greece, Ireland,
Portugal, Romania and Turkey. Ahmed will also become Executive
Chairman Vodafone Germany. Ahmed joined Vodafone in 1999 and has
held a number of roles including CEO Other Europe, Chief Commercial
Operations and Strategy Officer and most recently CEO
UK.
Serpil Timuray appointed CEO Vodafone Investments
Serpil will take on responsibility for our investments, including:
Vantage Towers, Vodafone Ziggo, Vodafone Idea and TPG Telecom.
Serpil will also have responsibility for our partnerships with
telecom operators, including our Partner Markets. Serpil joined
Vodafone in 2009 as CEO Turkey, with subsequent roles including
Regional CEO AMAP, Chief Commercial Operations and Strategy Officer
and most recently CEO Other Europe.
Other changes to Executive Committee responsibilities
● Philippe
Rogge, CEO Vodafone Germany, will step down from his current role
and as a member of the Group Executive Committee, leaving
Vodafone.
Group Executive Committee composition from 1 April
2024
● Margherita
Della Valle, Group Chief Executive
● Luka
Mucic, Group Chief Financial Officer
● Ahmed
Essam, Executive Chairman Vodafone Germany and CEO European
Markets
● Aldo
Bisio, Chief Commercial Officer and CEO Vodafone
Italy
● Shameel
Joosub, CEO Vodacom Group
● Giorgio
Migliarina, Interim CEO Vodafone Business
● Serpil
Timuray, CEO Vodafone Investments
● Scott
Petty, Chief Technology Officer
● Alberto
Ripepi, Chief Network Officer
● Leanne
Wood, Chief Human Resources Officer
● Joakim
Reiter, Chief External and Corporate Affairs
Officer
● Maaike
de Bie, Group General Counsel and Company
Secretary
Other Senior Leadership Team changes
Vodafone Germany CEO
Marcel de Groot is appointed as CEO Vodafone Germany, reporting to
Ahmed Essam. Marcel
joined Vodafone Germany in 2022 as Consumer Business Director and
has been instrumental in the recent commercial improvements in
Germany. Prior to that he was Chief Commercial
Officer and Director of the Consumer Business Unit at Vodafone
Ziggo and Director of Consumer in Vodafone Ireland. Marcel has a
strong track record of leading commercial operations in converged
telecoms operators.
Vodafone UK CEO
Max Taylor is appointed CEO Vodafone UK, reporting to Ahmed Essam.
Max is currently Chief Commercial Officer of Vodafone UK,
responsible for the commercial performance of the Consumer division
including sales and marketing, digital, brand, customer experience
and commercial operations. Max joined Vodafone in 2019 and has
helped Vodafone UK grow Consumer revenues for the last five years
and become the fastest growing UK broadband provider.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorised.
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VODAFONE
GROUP
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PUBLIC
LIMITED COMPANY
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(Registrant)
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Date:
March 15, 2024
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By: /s/ M D B
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Name: Maaike de Bie
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Title: Group General Counsel and Company Secretary
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