The acquisition will be made in cash and will be „broadly neutral” to earnings in the next year, Newbury, England-based Vodafone said in an emailed statement Sunday. „The deal appears very aggressive as they get a very big chunk of customers,” said David Thomson, an analyst at Bryan Garnier & Co. in London. „The acquisition is in line with Vodafone’s strategy to expand into fixed line and particularly broadband.”
The purchase gives Vodafone more than 3.15 million new customers in Spain and Italy, after acquisitions in India in May and Turkey last year boosted growth in emerging markets. Chief Executive Arun Sarin has struggled to protect market share in Europe, where some countries have more subscriptions than people.
„We have now established a clear route to delivering fixed broadband services in each of our major European markets,” Vodafone said in the release. Tele2 Italy had more than 2.6 million customers at the end of June, including over 400,000 broadband clients. Tele2 Spain had 550,000 customers, over 240,000 of which were for broadband.
Earnings, dividend
The UK company does not expect the acquisition to have „a material impact” on the group’s 2007-2008 outlook and added that it will have no effect on expectations for „modest dividend growth in the near term”. Vodafone in June lost out to France Telecom SA in acquiring Ya.com, a Spanish Internet access business.
Tele2 CEO Johan Jarnheimer said last month that the company would be willing to dispose of assets if the price was right. Sweden’s second largest telephone company is retreating from Denmark, France, Portugal, Hungary, the UK, and Belgium. Wind Telecomunicazioni SpA, the Italian wireless company controlled by Egyptian billionaire Naguib Sawiris and Tiscali SpA, also expressed interest in Tele2 Italy.
Vodafone shares have gained 20% this year, compared with a 6% advance in the UK’s FTSE 100 Index. The company expects the transaction to be completed by the end of this year after getting regulatory approval. Perella Weinberg Partners, the investment bank founded by Joseph Perella, advised Tele2 on the sale. (tehrantimes)
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