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[January 09, 2013]
Business analysis: Vodafone: Verizon stake is more valuable as a long-term hedge than as a windfall, says Juliette Garside
(Guardian (UK) Via Acquire Media NewsEdge) V is for valuable. Vodafone's stake in Verizon Wireless, the largest mobile network in the US, brought the British firm pounds 5bn in two dividend payments last year. If it was put up for sale, it could generate pounds 50bn.
Which is why Vodafone investors took heart yesterday when Lowell McAdam, chief executive of fixed-line telecoms group Verizon Communications and the owner of the other 55% of Verizon Wireless, told the Wall Street Journal a deal to buy out the British company was "feasible".
Verizon Wireless may have reached a peak, making 2013 the year to sell.
What would Colao spend his windfall on were he to exit America Vodafone could invest in fibre as it has done in the UK with Cable & Wireless Worldwide, creating businesses that offer fixed-line and mobile to rival France and Germany's former national telecoms groups.
The proposition sounds risky at a time when profits for these incumbents are deteriorating. And a disposal would generate a giant capital gains tax bill. Verizon may be of more value as a long-term hedge against the chill winds in Europe than as a one-off windfall.
(c) 2013 Guardian Newspapers Limited.
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