Vodafone in talks to sell Verizon Wireless stake

8/29/2013
ASSOCIATED PRESS
  • Britain-Vodafone-Verizon

    FILE - A Monday, July 28, 2008 photo from files showing Eric Roden speaking on his cell phone as he walks past a Verizon store in Portland, Ore., Britain's Vodafone PLC, one of the world's largest mobile phone companies, confirmed Thursday that it was in discussions with Verizon Communications to sell its operations in the United States. The British wireless provider is mulling its options for its 45 percent stake in the U.S.'s Verizon Wireless, of which Verizon Communications owns the other 55 percent. Analysts have suggested that Verizon wants to pay around $100 billion for Vodafone’s stake, although reports have said that U.K. group is pressing for as much as $130 billion.(AP Photo/Don Ryan, File)

    ASSOCIATED PRESS

    • LONDON  — Britain’s Vodafone PLC, one of the world’s largest cellphone companies, confirmed today that it was talking to Verizon Communications about selling its U.S. operations.

    The U.K. company is mulling its options for its 45 percent stake in the U.S.’s Verizon Wireless, of which Verizon Communications owns the other 55 percent.

    Analysts have suggested that Verizon wants to pay around $100 billion for Vodafone’s stake, although reports have said that U.K. group is pressing for as much as $130 billion.

    Vodafone’s shares were trading 8.14 percent higher at 2.05 pounds after it confirmed the talks with Verizon.

    Vodafone, which has wide-ranging interests and is expanding in Europe, has long been rumored to be interested in a U.S. exit. Talks on a sale earlier reportedly broken down over price and tax concerns.

    But competition among cellphone providers and other companies moving into the cellphone space is pushing both companies toward a deal, said Ronald Klingebiel, a telecommunications specialist with Warwick Business School. Vodafone also had no control in running its Verizon stake, which made it more of an investment than a base from which to expand into the U.S. market.

    “This would be a happy moment to exit,” Klingebiel said.

    At the same time, Vodafone is pushing ahead with a takeover bid for Germany’s biggest cable operator, Kabel Deutschland, as part of its strategy to dominate media services in Europe, its biggest market.

    If approved by regulators, Vodafone would gain 32.4 million mobile, 5 million broadband and 7.6 million direct TV customers in Germany. It has 19.2 million mobile customers in the UK, and it has been under intense competition.

    Any proceeds from a Verizon Wireless sale would add to its war chest for further acquisition or allow the company to pay down debt.

    But analysts have been cautious, wary of Vodafone’s track record on mergers. In 2000, in what was the largest corporate merger ever, the company took over Mannesmann AG in a stock-swap deal valued at $180 billion. Many analysts at the time believed the German company was overvalued.