Vodafone AirTouch Signs Put Agreements With Shareholders Of Airtel

Vodafone AirTouch Plc ("Vodafone AirTouch") today announces that it has agreed arrangements whereby it has granted to Acciona, S.A. ("Acciona"), and affiliates of Torreal, S.A. ("Torreal") and Corporacion Financiera Alba, S.A. ("Alba") a series of conditional put options in respect of their shareholdings representing, in aggregate, 16.91% of Airtel Móvil, S.A. ("Airtel"). Vodafone AirTouch currently has a 21.7% stake in Airtel. Should any or all of the put options be exercised and completed, Vodafone AirTouch and / or its affiliates would acquire an additional holding of up to 16.91% in Airtel. Consideration will be issued in Vodafone AirTouch shares or, in certain circumstances, cash and will vary according to which put is exercised. The first set of put options contains provisions whereby Acciona, Torreal and Alba commit up to 31 May 2001 not to sell their participations in Airtel other than to Vodafone AirTouch. Three sets of put options have been granted, all of which are subject to a number of conditions:

Ø The first set of put options relates to up to 6.85% of Airtel and the consideration (if in shares) will be the issue of a maximum of 335,342,322 Vodafone AirTouch shares, subject to adjustment in certain circumstances.
Ø The second set of puts, which may be exercised by each shareholder only if the first put relating to such shareholder has been exercised and completed, relates to all or part of the remaining 10.06% in Airtel held by Acciona, Torreal and Alba. The consideration (assuming payment in shares) will be based on the average of the 30 day closing price for Vodafone AirTouch shares prior to exercise with a collar of between £2.50 and £4.50 per share and is subject to an annual price accrual, resulting in a maximum of 718,393,440 shares being issued. The maximum number of shares issued as consideration has been calculated based on a pound/euro exchange rate of 1.6207 and will vary based on movements in the exchange rate between the two currencies.
Ø The third set of puts may only be exercised by each shareholder if the first put relating to such shareholder has not been exercised and / or completed, and relates to the exchange of up to 16.91% of Airtel for a maximum of 796,270,268 shares in Vodafone AirTouch (assuming payment in shares).

The consideration will be payable in cash (i) in the case of all of the put options, in certain specified circumstances, (ii) in the case of the second and third sets of puts, at the option of Vodafone AirTouch, and (iii) in the case of the second set of puts, if the transfer takes place on or after 1 January 2002, in which case the consideration for the full 10.06% would be Euro 2.9bn subject to an annual price accrual. In the other cases where the consideration is in cash, it will be the cash equivalent of the price of the relevant number of Vodafone AirTouch shares for each put (based on the average of the 30 day closing price for such shares). Such cash consideration will not be payable until 1 January 2002, subject to an annual price accrual.

The first and third sets of put options also contain provisions making appropriate adjustments for changes in the issued share capital of Airtel. The Airtel shares may be subject to pre-emption rights in favour of third parties in certain circumstances.
Airtel is Spain's second largest mobile phone operator and currently has over 5m subscribers. The company has introduced fixed line telephony and internet offerings as part of its strategy to use its wireless customer base to become a full service telecommunications company.
Airtel operates in the fast growing Spanish telecommunications market. This transaction forms part of Vodafone AirTouch's strategy to consolidate its position in the markets in which it operates. Through this transaction, Vodafone AirTouch aims to increase its presence in the Spanish market and take a greater role in the long term development of Airtel.
In the year ending December 1998, Airtel had revenues of approximately £738m, EBITDA of approximately £164m and profits after tax of approximately £10m. The net asset value of Airtel as of December 1998 was approximately £343m.

Commenting on the transaction Julian Horn-Smith, Executive Director of Vodafone AirTouch, said: "We are extremely pleased to reaffirm our commitment to increasing our holding in Airtel as well as enhancing our relationship with Acciona, Torreal and Alba. We see the Spanish market as a key growth market for wireless telecommunications. Airtel is well positioned and we are eager to play a greater role in using the strengths of Vodafone AirTouch to develop its potential further."