Vodafone’s Stake in Verizon Wireless to be Bought by Verizon For $130 Billion

Verizon, the U.S.' largest mobile operator, recently announced plans to buy out Vodafone’s stake in the U.S. wireless business; this means that full ownership over Verizon Wireless will be given to the telecommunications giant.

As a result of the deal, $130 billion will be paid in cash and stock in return for 45 percent of Vodafone’s stake in the Verizon Wireless business. The deal is expected to close in Q1 of next year.

Verizon states that by becoming the only owner of its wireless business, a full offensive can be launched on emerging markets like big data and machine-to-machine, whilst at the same time profiting from a growing demand for 4G LTE and broadband services.

The CEO and chairman at Verizon, Lowell McAdam, said: “This transaction will enhance value across platforms and allow Verizon to operate more efficiently, so we can continue to focus on producing more seamless and integrated products and solutions for our customers. We believe full ownership will provide increased opportunities in the enterprise and consumer wireline markets.”

The president and principal analyst at industry research firm Moor Insights & Strategy, Patrick Moorhead, also noted that Verizon will probably benefit from the deal with more competitive edge in the U.S. service provider market.

Moorhead said: “This deal was all about control and cash. Verizon wanted complete control over their own destiny without having to seek approval from Vodafone. Verizon will be much more nimble after this gets approved.”

According to the Wall Street Journal, for a number of years, both Verizon and Vodafone were in discussions, before the deal was recently announced. Both companies were at the time unable to set a price for Vodafone’s stake (earlier this year, $100 billion was offered by Verizon) but Vodafone wanted around $130 billion.

Verizon’s $130 billion payout will give “substantial returns” to shareholders, and the British company will likely put the amount towards its investment program for 4G LTE, fiber, broadband and other mobile technologies, called Project Spring.

The Vodafone Group Chairman, Gerard Kleisterlee, said: “Our sustained investment in Verizon Wireless has created a great deal of value for shareholders from a market leader with great momentum. Verizon's offer now provides us with an opportunity to realize this value at an attractive price.”

In the U.S., Verizon wireless is the top wireless carrier; comScore, an industry research firm, states that Verizon Wireless last year accounted for 31.2 percent of the whole U.S. wireless service provider market, followed by AT&T at 27.3 percent, Sprint at 15.7 percent, and T-Mobile at 11.6 percent. (CY) Link