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Press Release -- May 24th, 2017
Source: Vodafone Group

Melita Ltd and Vodafone Malta merger to create new fully integrated communications provider in Malta

Apax Partners Midmarket SAS (“Apax”), Fortino Capital (“Fortino”) and Vodafone Group Plc (“Vodafone”) today announced an agreement to combine Melita Ltd (“Melita”) and Vodafone Malta Ltd (“Vodafone Malta”) (together, the “Combined Company”).

The transaction combines Vodafone Malta, the country’s leading mobile operator with the highest customer satisfaction scores and an industry-leading 4G mobile network covering 99% of the Maltese population, with Melita, Malta’s leading cable, broadband and pay TV provider, with a network covering 99% of Maltese households. Melita offers a wide range of rich content and superfast broadband download speeds of up to 250mbps.

The Combined Company’s mobile and enterprise business will operate under the Vodafone brand, distribute a wide range of services including Vodafone’s global portfolio of products and services and benefit from access to Vodafone’s extensive expertise in mobile and fixed operations worldwide.

Transaction rationale

The combination will create a new fully integrated communications company with the scale and resources required to offer competitive ‘quad play’ bundled mobile, fixed broadband, fixed telephony and TV services to Maltese consumers and a full range of enterprise services for businesses and the public sector.

In a market where demand for converged services is accelerating rapidly1, the Combined Company will be in a stronger position to compete with the fully integrated incumbent, GO, ensuring sustainable consumer choice over the long term.

The Combined Company is expected to be able to generate cost synergies through the rationalisation of overlapping activities and greater network investment efficiency as the Combined Company introduces 4.5G, and subsequently 5G, mobile networks and gigabit-capable fixed networks.

1 According to the Malta Communications Authority, in the fourth quarter of 2016, 78.7% of fixed broadband connections and 68.4% of postpaid fixed lines were sold in a bundle. See “Key Market Indicators for Electronic Communications and Post” Q1 2012 to Q4 2016

Transaction details

At completion, the current shareholders of Melita will own 51% of the Combined Company and Vodafone Europe B.V. (“VEBV”), the current shareholder of Vodafone Malta, will own the remaining 49%2.

The transaction values Vodafone Malta at an enterprise value of €208 million, equivalent to multiples of 6.8x EV/2016 EBITDA and 15.1x EV/2016 OpFCF. The transaction values Melita at an enterprise value of €298 million, equivalent to multiples of 8.9x EV/2016 EBITDA and 15.3x EV/ 2016 OpFCF3.

At completion, the Combined Company’s net debt is expected to be approximately €345 million and Vodafone will receive an estimated cash payment of €120 million which will be used for general corporate purposes. Melita’s shareholders will receive an estimated cash payment of €33 million.

The Combined Company will not be consolidated in Vodafone’s accounts and will be reported on an equity accounting basis after completion of the transaction. The transaction is not expected to have a material impact on Vodafone Group’s free cash flow or earnings.

The Melita shareholders intend to appoint the current CEO of Melita, Harald Rösch, as CEO of the Combined Company and Vodafone intends to appoint the current CFO of Vodafone Malta, Caroline Farrugia, as CFO of the Combined Company. Vodafone will announce a new role for Amanda Nelson, the current CEO of Vodafone Malta, in due course.

Conditions to completion and indicative timeline

The transaction is conditional on approval from the Malta Competition and Consumer Affairs Authority and is expected to close in the second half of the 2017 calendar year.

2 Excluding the dilutive effect of management incentivisation plans for the Combined Company

3 Melita underlying OpFCF for the twelve months ended December 31, 2016, adjusted to exclude non-recurring capital expenditure relating to IRU investments

For further information:

Vodafone Group

Media Relations

Investor Relations
Telephone: +44 (0) 7919 990 230

Melita Chris Scicluna
PR Director – Hype

Apax Partners MidMarket
Coralie Cornet
Communication Director
+ 33 1 53 65 01 35

Fortino Capital
Lyzette Martens
Communications Director
+ 32 2 669 10 50

About Vodafone Group
Vodafone Group is one of the world’s largest telecommunications companies and provides a range of services including voice, messaging, data and fixed communications. Vodafone has mobile operations in 26 countries, partners with mobile networks in 48 more, and fixed broadband operations in 17 markets. As of 31 March 2017, Vodafone had 515.7 million mobile customers and 17.9 million fixed broadband customers, including India and all of the customers in Vodafone’s joint ventures and associates. For more information, please visit:

About Vodafone Malta
For the twelve months ended December 31, 2016, Vodafone Malta generated €30 million of underlying EBITDA and €14 million of underlying OpFCF. For the financial year ended March 31, 2016 Vodafone Malta generated a profit before tax of €11 million and had gross assets of €77 million.

About Melita
For the twelve months ended December 31, 2016, Melita generated €33 million of underlying EBITDA and €20 million of underlying OpFCF.

About Apax Partners MidMarket
Apax Partners MidMarket is a leading private equity firm in France and Europe. With more than 45 years of experience, Apax Partners MidMarket provides long-term equity financing to build and strengthen world-class companies. Funds managed and advised by Apax Partners MidMarket exceed €3 billion. These funds invest in fast-growing middle-market companies across four sectors of specialisation. Apax Partners MidMarket TMT investment includes Altran, Gfi Informatique, InfoVista, Melita, Nowo-ONI and Vocalcom.

About Fortino Capital
Belgian based Investment company Fortino Capital invests in small and medium-sized businesses with growth potential. Fortino Capital believes in the potential of visionary entrepreneurs with a focus on technology, E-commerce and digital transformation. Fortino Capital brings strengthening of capital, expertise and experience in the areas of innovation, strategy and growth. For more information:

Akira Partners LLP, DLA Piper UK LLP and Linklaters LLP acted as exclusive advisors to Vodafone. Lazard, Weil Gotshal & Manges and Jones Day acted as exclusive advisors to Apax Partners MidMarket and Fortino Capital.

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