Vodafone hints at big deal on the Verizon

The telecoms giant is back in talks with Verizon over the £100bn sale of its US stake.

by Gabriella Griffith
Last Updated: 12 Nov 2013
Vodafone has resumed its talks with Verizon Communications over the sale of its 45% in their shared company, Verizon Wireless, causing its share price to spike to a 12-year high.
 
Verizon, which owns the 55% remaining stake of Verizon Wireless, has been chipping away at Vodafone to sell its stake for a number of years and has succeeded in reigniting the discussions with the British telecoms giant. Every time the two have toyed with the idea of a sale previously, they couldn’t agree on a price. Verizon is keen to take Vodafone's stake off it to cancel out the whopping dividends it pays
 
Speculation that talks were back on had been rife among pundits, until Vodafone confirmed the reports.
 
‘Vodafone notes the recent press speculation and confirms that it is in discussions with Verizon Communications Inc regarding the possible disposal of Vodafone's US group whose principal asset is its 45% interest in Verizon Wireless,’ said a spokesperson.
 
‘There is no certainty that an agreement will be reached.’

Verizon Wireless is the largest and most profitable phone operator in the US, with an estimated 100 million customers. Verizon reportedly offered Vodafone $100bn for its stake earlier this year but Vodafone is apparently looking for somewhere around the $130bn mark. These new talks will stand or fall on Vodafone's ability to mitigate the tax liability as much as the price. Some analysts have argued price isn't the real reason behind Vodafone's reluctance to sell, rather the huge tax bill the British company will face if its repatriates the profits. And we all know Vodafone isn't a big fan of corporation tax.
 
City traders are obviously overjoyed by the prospect of a large injection of cash for Vodafone but the sale would mean it losing its only non-European partnership, and one of the only growth businesses in its portfolio.
 
The news comes at the same time as Vodafone launches its 4G data service across London, making its admission all the more timely. The telecoms giant has enlisted the help of Yoda to help peddle its new ‘super-fast’ service, which is almost a year behind its rival EE.
 
What better way to get your brand splashed across the headlines of every news source in town, than admitting you’re on the verge of what could be the largest corporate transactions of all time?
 
Canny Vodafone, very canny. As its ad mascot Yoda might say: the force is strong in this one.

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