Vodafone is selling its 51% stake in Qatari operations to the existing partner Qatar Foundation (QF), but its brand name will be retained in Qatar with the British telecom major agreeing to extend the technical support for another five years.

Moreover, Vodafone Qatar’s licence, originally granted by the Communications Regulatory Authority for 20 years, has been extended for an additional 40 years until 2068, which will greatly help reduce annual amortisation costs from QR403mn to about QR100mn, making it profitable in the foreseeable future.
The board has also suggested halving the face value of its shares to QR5 in order to address the QR4.27bn accumulated losses, largely on account of the amortisation costs of the licence. However, this will have no cash impact on the Qatar Stock Exchange-listed company.
On the proposed equity stake sale, Vodafone Qatar said QF entered into a conditional share purchase agreement with Vodafone Europe, whereby QF agreed to purchase 51% stake in the share capital of joint venture of QF and Vodafone (private founder), which currently owns 45% of Vodafone Qatar.
Upon completion of the transaction, which is subject to and conditional upon various regulatory approvals being obtained and the satisfaction of a number of conditions precedent, the private founder will be 100% owned by QF whose direct and indirect shareholding in Vodafone Qatar will then increase from its current level of 27.05% to 50%.
The other shareholders of Vodafone Qatar include General Retirement and Social Insurance Authority with 6.69% stake, Military Pension Fund (General Retirement Authority) 5.23% and Qatar Foundation for Education, Science and Community Development 5%.
On capital reduction, the board has decided to implement a reduction in the share capital of the company from QR8.45bn to QR4.23bn by reducing the nominal value of the shares from QR10 per share to QR5 in accordance with the relevant provisions of Articles 201 to 204 of the Commercial Companies Law No.11 of 2015, and the Articles of Association of the Company.
Apart from extinguishing the historical losses, the move also seeks to deliver long-term growth potential, attract new investors and enable future payment of dividends.
"These changes will also have a positive impact on the operational and financial health of the company and as a result, deliver strong long-term shareholder value," according to Vodafone Qatar chairman Abdullah bin Nasser al-Misnad.
The company intends to reduce the size of the board from nine members to seven, which will take effect at the end of the term of the existing board members, subject to obtaining the approval of the shareholders of the company at an extraordinary general assembly.

Related Story