Governance (continued) 82 Vodafone Group Plc Annual Report 2024
Strategic report
Governance
Financials
Other information
US shelf registration In July 2023, the Board approved the renewal of Vodafone’s US shelf registration to enable the Company to issue bonds in the US public bond market.
Investor relations The Board received regular updates on market share information, share price performance and how we have engaged with institutional investors and analysts. Sentiment and feedback from investor roadshows and conferences was also provided during the year. Read more about how the Board engaged with investors during the year on page 14
Strategy and business developments Shape of the Group
The Board spent a significant amount of time during FY24 discussing our strategic priorities and the shape and size of the Group to support these. In addition to the scheduled Board meetings, several adhoc meetings were held to consider strategic transactions. The Board also attended a strategy off-site session in Germany that focused on strategic evolution, execution of the strategic priorities and portfolio objectives.
UK Board discussion focused on the strategic options available to the UK business. The proposed merger of Vodafone UK and Three UK provides the necessary scale to be able to accelerate the rollout of full 5G coverage, benefiting customers through competitively priced access to a reliable, high-quality, and secure 5G network throughout the UK. The transaction is great for customers, great for the country and great for competition. Subject to regulatory and shareholder approvals, the transaction is expected to close around the end of 2024. Key steps to date – October 2022: we confirmed that discussions were taking place with CK Hutchison Holdings (‘CK Hutchison’) in relation to a possible combination of Vodafone UK and Three UK; – June 2023: we announced that binding agreements had been entered into with CK Hutchison; – December 2023: engagement with political and regulatory stakeholders continued; and – January 2024: filing with the UK Competition and Markets Authority. As anticipated, in April 2024 the merger inquiry progressed to Phase 2.
Spain The Board received regular updates on the transaction opportunities available to the business portfolio in Spain. In October 2023, we announced that the Board had taken the decision to enter into binding agreements with Zegona Communications plc (‘Zegona’) for the sale of Vodafone Holdings Europe, S.L.U. (‘Vodafone Spain’). The sale of Vodafone Spain is a key step in right-sizing the Group’s portfolio for growth and will enable us to focus our resources in markets with sustainable structures and sufficient local scale, improving the Group’s competitiveness. The transaction is subject to regulatory clearance. Key steps to date – May 2023: the Board considered transaction opportunities across the Group; – September 2023: the Board received an update on the structure of a proposed deal and discussed the options available; and – October 2023: we announced that the Board had approved the request to enter into binding agreements with Zegona in relation to the full sale of Vodafone Spain.
Italy Vodafone has engaged extensively with several parties to explore market consolidation in Italy, including through a merger or disposal. The Board is supportive of in-market consolidation and has discussed the merits and risks of each option presented at length. Following input, the options available were narrowed and in March 2023, we announced that a binding agreement had been entered into with Swisscom AG (‘Swisscom’) for the sale of Vodafone Italy. The sale supports the new strategic direction of the Group and is subject to regulatory clearance. Key steps to date – December 2023: we reiterated that Vodafone is supportive of in-market consolidation in countries where appropriate returns on invested capital are not being achieved and confirmed that options with several parties were being explored to achieve this in Italy; – February 2024: we announced that Vodafone was in exclusive discussions with Swisscom regarding a potential sale of Vodafone Italy to Swisscom; and – March 2024: we announced that a binding agreement had been entered into with Swisscom for the sale of Vodafone Italy. The sale is the third and final step in the reshaping of the Group’s European operations. Subject to regulatory approval, the sale to Swisscom will create significant value and ensures the business maintains its leading position in Italy.
Section 172 considerations In accordance with section 172 of the Companies Act, the Board, with support from external advisers where required, undertook an analysis as part of the decision-making process to consider stakeholder interests and whether each of the proposed transactions was in the best interests of the Company’s members as a whole. The following factors were taken into consideration by the Board in its analysis and decision-making: terms and structure proposed; strategic and financial rationale; business plan and business case; valuation; due diligence findings; associated risks; regulatory, legal and governance considerations; the impact on employees and customers; and market perception. Following deliberation, the Board concluded that the proposed transactions were in the best interests of the Company, and aligned with our strategic priorities. The transactions in Spain and Italy will deliver €12 billion of upfront cash proceeds. As part our broader capital allocation review, the Company intends to return up to €2 billion to shareholders via buybacks following the completion of the sale of Vodafone Spain, with an opportunity for further share buybacks of up to €2 billion following the completion of the sale of Vodafone Italy.
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