Vodafone has arranged to sell its 3.2% stake in China Mobile for £4.3 billion (€5.2 billion), prompting speculation that more asset sales are on the way.
The UK operator will sell its 642.9 million shares to a group of banks including Goldman Sachs, Morgan Stanley and UBS, which will then on-sell the stake on to institutional investors, FT.com reported.
Vodafone plans to use 70% of the proceeds to buy back shares, with the remainder used to reduce its £33.3 billion net debt.
CEO Vittorio Colao flagged up plans to divest minority holdings in July, saying the company would focus on its core markets in Europe, Africa and India.
The sale of the China Mobile stake, which Vodafone acquired in 2000 and 2002 for around $3.3 billion (€2.5 billion), is its biggest divestment.
“Today’s transaction achieves a near doubling of Vodafone’s original investment in China Mobile,” Colao said.
China Mobile and Vodafone will continue to cooperate on mobile phone technology through a strategic alliance formed in 2000.
Vodafone is under increasing pressure from discontented investors to sell out of its minority holdings, due to its struggling share price and hefty debt.
The largest and most contentious of these is its 45% stake in Verizon Wireless, which is worth an estimated £33 billion. Verizon, which owns the rest of the company, hasn't paid Vodafone a dividend since 2005.
Vodafone also owns 44% of SFR and 24% of Polkomtel in Poland, WSJ.com said.
But a sale of the Verizon Wireless and SFR stakes would be difficult to arrange, because Verizon and Vivendi – which owns the remainder of SFR – would be the only likely buyers.
Vodafone’s London-listed stock rose 0.10p overnight to 158.90p, but fell slightly to 158.20p by mid-morning.