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[January 09, 2013]
Voda's US partner eyes wireless stake [Daily Mail, London]
(Daily Mail (London, England) Via Acquire Media NewsEdge) Jan. 09--VODAFONE shares jumped as the chief executive of US partner Verizon fired the opening salvo in what industry sources said could develop into a full-blown bid to buy out their joint venture.
Verizon Communications boss Lowell McAdam reignited talk of a bid for Voda's 45pc stake in fast-growing mobile business Verizon Wireless, saying a deal that analysts think could be worth at least pounds sterling 50bn is now "feasible." "We have always said we would love to own all of that asset," said McAdam, whose firm owns the other 55pc of Verizon Wireless.
He added that there were "lots of different ways we could do it," prompting speculation in the City of a cash-plus-shares deal staggered over several years.
Vodafone's shares rose 2.75p to 162.4p on the back of hopes that a multi-billion pound windfall could beef up its balance sheet. Sources close to the FTSE 100's fifth-largest company said it had not prompted McAdam's comments by making any indication that it is willing to sell.
But industry figures said that the American's surprise intervention heralds a concerted buyout effort that might prove too tempting for the Vodafone board.
One said Vodafone boss Vittorio Colao had until relatively recently been pondering a mega-merger with Verizon, to create a global telecoms giant dominating the North Atlantic and Europe. But Verizon's stellar growth in the US, which contrasts heavily with slowing sales for Vodafone in the stagnant European market, means the British firm would struggle to pursue a deal as an equal partner.
The company's board is also understood to be nervous about the reliability of its income from the Verizon Wireless dividend.
The 45pc stake appears to be Voda's jewel in the crown, given that it contributed pounds sterling 5.2bn in dividends last year, including a one-off special payout. The huge windfall compares with Vodafone's latest annual pre-tax profit of pounds sterling 9.5bn.
But last year's dividend followed years of no payout at all, while Vodafone executives are thought to be concerned that decisions affecting such a large source of income are made in New York.
The US company's controlling stake in Verizon Wireless means it could turn off the dividend tap at any time by deciding, for instance, to invest billions in its network instead. The implicit threat to Vodafone's financial health could convince the company to reconsider its attachment to Verizon Wireless and go for a short-term payday instead.
If Vodafone opts to cash out of its US venture, shareholders including hundreds of thousands of pensioners could be in line for their own dividend windfall from the company.
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