Vodafone close to selling its stake in SFR
Dec 6 2010 by John Hill, The Journal
VODAFONE is reportedly close to selling its stake in the jointly-owned French mobile phone company SFR to media group Vivendi.
Vivendi is the majority stakeholder in SFR, with 56% control of the mobile phone and internet firm. However, Vodafone appears close to finalising a deal that will transfer its own 44% share to Vivendi.
According to The Observer newspaper, the stake will change hands for around £7bn, allowing the Newbury-based mobile phone company to work towards a £5bn buyback of its own stock next year. Vodafone is also expected to reveal it has sold its 24% stake in Polish group Polkomtel, raising a further £800m which will be partly used to pay down debt and also returned to shareholders through a share buyback.
In recent months, the company’s strategy of selling off holdings in companies across the world has seen Vodafone relinquish its 3.2% stake in China Mobile in September.
It also sold its shares in Japanese mobile business Softbank for £3.1bn last month, but could hold onto its 45% stake in Verizon Wireless in the US, a stake that could go for as much as £33bn but incur a £10bn capital gains tax bill. Vodafone announced last month that half-year profits were up by 3% to £6.1bn, and raised its guidance for full-year profits to a figure between £11.8bn and £12.2bn. UK revenues rose 5.2% in the second quarter, boosted by an increase in sales of mobile internet bundles and Apple’s iPhone.
However, the company has been dogged by tax-related controversy in recent months. It was recently fined £1.6bn in back-taxes by Indian authorities, relating to its purchase of Hutchinson Whampoa’s Indian telecom assets in 2007. It claims it does not owe tax as the deal took place between two foreign companies. Protesters also returned to Vodafone stores for the second time in two months this weekend to complain about allegations of tax avoidance.
Groups such as UK Uncut say clamping down on methods by rich individuals and businesses to avoid tax would increase the public purse by £25bn a year.
Their anger with Vodafone stems from the company’s purchase of German firm Mannesmann for £112bn, in which it channelled loans raised for the deal through the tax haven of Luxembourg. Private Eye said a subsequent deal with HRMC was £6bn short of the tax owed, but HRMC say this write-off is an “urban myth”.
