Vodafone plans to return 71 percent of the proceeds to its shareholders, while GBP 6 billion will be go to a new three-year investment programme called Project Spring. The latter will see the group accelerate its 4G roll-out to 90 percent of its five main European markets by 2017, enhance 3G coverage and capacity in mature and emerging markets, extend its fixed broadband services based on fibre and VDSL, upgrade distribution outlets, improve the portfolio of enterprise services, speed up the deployment of mobile payment services and develop new systems to improve customer experience and simplify operations.
The Vodafone shareholder pay-out will include a mix of the Verizon shares and cash, worth in total 112 pence per share. In addition Vodafone pledged to increase its 2014 dividend by 8 percent to 11 pence per share. After the divestment of the Verizon Wireless stake, shareholder pay-out and proposed Kabel Deutschland takeover, the company's balance sheet will remain strong, with net debt at 1.0 times EBITDA.
Vodafone also adjusted its guidance for fiscal 2014 based on the sale of the Verizon stake and acquisition of the rest of the Italian operation, and now expects adjusted EBITDA of around GBP 5 billion and free cash flow of GBP 4.5-5.0 billion. That compares to an earlier outlook of GBP 11.1-11.9 billion in profit and GBP 5.3-5.8 billion in cash flow.
The Verizon transaction is expected to close in Q1 2014, pending approval by Vodafone and Verizon shareholders and regulators. Verizon retains an option to increase the cash portion of the deal by up to USD 15 billion, while the share issue will increase the number of its outstanding shares by up to 45 percent. Verizon has arranged a USD 61 billion bridge facility with a group of banks to finance the deal. The US operator separately announced a 2.9 percent increase in its quarterly dividend, to USD 0.53 per share.
