Analyst, Vodafone cast doubt on likelihood of telco's sale

Vodafone Group statements 'blown a little out of proportion,' says analyst

Vodafone CEO Inaki Berroeta. Credit: Vodafone

Vodafone CEO Inaki Berroeta. Credit: Vodafone

Credit: VHA

The likelihood of a sell-off of Australia's number three telco, Vodafone Australia, has been greatly exaggerated, according to both the telco itself and a local telecom analyst.

Speculation about a possible sale of the telco, which is a joint venture of Vodafone and Hutchison Australia, exploded after Vodafone Group's chief executive, Vittorio Colao, was asked at an investor conference if it would consider selling it business in Australia and two other weak markets.

“We constantly check with possible parties interested in some of our less core assets,” said Colao, according to multiple news reports.

“We would consider sales but we are not distressed sellers so therefore we must sell at full value. Otherwise we keep them and manage the cash.”

While initially declining to comment, a Vodafone Australia spokesperson on late Friday issued a statement to deny media reports that Vodafone or Hutchison was mulling a sale in Australia:

"Vodafone has no plans to sell its business in Australia. Vodafone Group Chief Executive Vittorio Colao was asked a question related to three of Vodafone's markets when speaking at an investor conference. He did not indicate that Vodafone is considering selling these businesses. Instead, he pointed out that – as a general principle – Vodafone will always have an open mind about its portfolio and will always act in the best interests of shareholders. This was a generic statement and was in no way intended to imply that we have specific plans for any Vodafone local market."

Chris Coughlan, an independent telecom analyst, agreed that too much has been read into Calao’s statement.

“I think either shareholder would consider a sale, but the investment made to date and the expectation of a return would make a sale very unlikely,” he told Computerworld Australia.

“These rumours jump up every few years, this one has been blown a little out of proportion; the Vodafone Global CEO stating the obvious and commentators reading more into it than he intended.”

Vodafone prefers to be the first or second telco in a market, so the global group probably isn’t happy about being third place in Australia, Coughlan said. In addition, the principal shareholder of Hutchison Australia has shown willingness to exit a market if the price and conditions are right, he said.

“The issue for the principle shareholders for VHA is that until the business is significantly turned around there is unlikely to be a buyer that would meet their price expectations.”

Another local telecom analyst, Paul Budde, said he reads Vodafone's statements as meaning they are open to offers if they are in the best interest of shareholders.

Read more: In brief: Vodafone switches on '4G+' network in Melbourne

"My interpretation is that they are currently not negotiating with anybody who is prepared to pay the price that will make Vodafone interested enough to have a look at it," he said.

At the same time, he said Vodafone seems to be saying, "Yes, if there is anybody with sufficient money, come and talk to us."

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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