Partnership with Vodafone: Swisscom gears itself up for growth in UMTS
08 November 2000
Swisscom Mobile is the mobile telecommunications business of Swisscom, which will be separated from Swisscom prior to completion of the transaction
The consideration for the 25% stake in Swisscom Mobile represents an equity value of CHF18 billion (£7.1 billion) and an enterprise value of CHF18.5 billion (£7.3 billion) assuming net debt of CHF0.5 billion (£0.2 billion) and assumes that Swisscom Mobile will have obtained and paid for a UMTS licence
The consideration for the equity will be paid either in cash or Vodafone shares, or a combination of both, at Vodafone´s discretion, in two instalments: CHF2.2 billion (£0.9 billion) will be paid at closing and the remaining CHF2.3 billion (£0.9 billion) will be paid within 12 months of closing
Swisscom Mobile will have access to Vodafone´s leading and innovative products and services, and it will participate in Vodafone´s supply-chain management and its products and services development initiatives
debitel will enter into an enhanced service provider agreement with Mannesmann D2 Mobilfunk providing it with access to Mannesmann D2´s UMTS products and services offering
The acquisition is expected to be completed by the end of March 2001 and is subject to the approval of Swisscom shareholders and to other regulatory approvals
Switzerland is a highly attractive mobile market with an affluent population of 7.3 million people and the highest GDP per capita in Europe. Swisscom Mobile has a 67% market share with over 3 million subscribers and is the clear market leader in both the residential and corporate segments.
The strategic partnership between the two companies will ensure that Swisscom Mobile will benefit fully from the experience and know-how of the global leader in mobile services. The seven members Board of Directors of Swisscom Mobile will comprise of four members from Swisscom, two from Vodafone and an independent board member. Swisscom will fully consolidate the results of Swisscom Mobile in its financial accounts.
Swisscom will use the proceeds to fund future growth including the purchase of a Swiss UMTS license, the roll-out of the UMTS network, the enhancement of the fixed network for broadband services, expansion of e-commerce solutions as well as moving debitel along the value chain. The remaining funds will be used to reduce indebtedness and Swisscom is also considering a share buyback.
Markus Rauh, Chairman of Swisscom, commented: "We have evaluated this partnership carefully. It will secure our future growth in the highly competitive Swiss mobile communications market. The foundations are now in place for building on our success in the new era of mobile communications - UMTS."
Jens Alder, Chief Executive of Swisscom, emphasized: "We are the Swiss market leader and this partnership will allow us to continue our success story."
Julian Horn-Smith, Chief Executive of Vodafone Europe, commented: "This strategic alliance represents an exciting opportunity for us to expand further our European footprint, partnering with Swisscom the leading mobile network in Switzerland. We are able to offer Swisscom the opportunity to participate in the substantial scope and scale advantages offered by Vodafone´s global reach, which we anticipate will make the partnership earnings accretive for both Vodafone and Swisscom. Benefits will accrue to Vodafone customers roaming in Switzerland and Swisscom customers will be able to benefit from the extensive international operations of Vodafone Group, which span 25 countries."
Swisscom was advised by J.P. Morgan on this transaction and Vodafone was advised by UBS Warburg.
Notes to editors:
The exchange rate used to calculate the Swiss franc to pound sterling exchange rate is CHF2.54/£1
Swisscom AG Sepp Huber +41(0)-31-342-9193
Citigate Dewe Rogerson Cary Martin +44-(0)20-7775-600815 J.P. Morgan Martin Kesselring +44-(0)20-7325-4864 Dirk Albersmeier +44-(0)20-7325-8570
Vodafone Group Plc Tim Brown, Investor Relations Director +44-(0)1635-33251 Melissa Stimpson, Senior Investor Relations Manager +4-(0)1635-33251