Belgacom pays Vodafone US$2.6 billion for rest of mobile arm Proximus

BRUSSELS (AP) – Belgium’s biggest telephone company, Belgacom SA, said Friday it has agreed to buy Vodafone Group PLC’s 25 per cent stake in Proximus for $2.6 billion US, giving it full control of the mobile operator. Proximus is Belgium’s largest mobile operator, with 47 per cent market share and 4.25 million customers. Belgacom said it expected the deal would add six to seven per cent to next year’s earnings – citing “significant synergies” and tax savings as it struggles with falling revenue from its main market, traditional telephone calls. It said it would finance the two-billion-euro buyout with a bridge loan in the short term and may make a bond offering later. It will also use the 67 million euros ($86 million) it will receive by selling its 5.8 per cent stake in French telecom firm Neuf Cegetel. France’s second largest mobile operator, SFR, has agreed to buy Neuf Cegetel. Belgacom said these deals were part of its plan to focus on its core market, saying it would continue to roll out new services such as digital TV and broadband internet in Belgium. Analyst Dirk Saelens who covers Belgacom stock for KBC Securities said both deals are positive news. The price paid for the Proximus stake “is not cheap, but it’s a good move and still earnings enhancing,” he said. Belgacom shares rose 2.5 per cent to 27.82 euros ($35.70) in trading in Brussels. The company faces a tough market, expecting revenue from its major source of revenue – fixed line telephone services – to decline by three per cent this year. New European Union rules on lower charges for international roaming to be introduced next year will also have a significant financial impact on Proximus, it said. Belgacom depends on fixed-line telephone calls for nearly half of its revenue but the market is shrinking. Revenue from fixed line services fell 1.4 per cent in the first six months of 2006, it said, which was partly offset from the growth in Internet, network integration services and selling access at wholesale rates to rivals. Belgacom reported a net profit of 219 million euros ($281 million) in the second quarter, down 23 per cent from 286 million euros in the same period last year. Total revenues rose 11 per cent to 1.525 billion euros ($1.96 billion) from 1.37 billion euros a year ago. Belgacom CEO Didier Bellens said the company would spend up to 200 million euros ($257 million) buying back shares and paying shareholders an interim dividend of 100 million euros ($128 million) before the end of the year. Bellens said the company was doing better than expected but preferred to reward shareholders rather than actively hunt for new acquisitions.

Source- http://money.canoe.ca

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