Vodafone lines up massive deal with US phone giant
UK telecoms company in talks with Verizon over $130bn buyout of its stake
VODAFONE has confirmed it is in talks with Verizon Communications over what could be one of the biggest deals in corporate history: the sale of the UK telecoms firm’s stake in their joint US venture, Verizon Wireless, America's largest phone operator.
Verizon Wireless was co-founded by the two telecom giants in 2000. But for more than a decade they have been in a stand-off over the buyout of the other's stake. For the past year it has seemed increasingly likely Verizon would buy Vodafone's 45 per cent stake and now reports say an agreement may be reached as early as next week.
Yesterday Vodafone confirmed it "is in discussions" with Verizon about the buyout but added: "There is no certainty that an agreement will be reached."
The Times reports that potential increase in the cost of borrowing is thought to have forced the issue, as interest rates in the US look set to rise. Another factor is consolidation among smaller mobile operator rivals.
It is believed Verizon wants to pay $100bn (£64.4bn) while Vodafone is seeking up to $130bn (£84bn). The final figure is likely to be closer to $125bn (£80.5bn). Following the news, shares in Vodafone surged 15.5p, or eight per cent, to 204.75p, a 12-year high. Verizon shares climbed three per cent.
Verizon Wireless is the most profitable phone operator in the US, with 100 million customers.
The deal would provide a large cash injection for Vodafone, possibly returning $20 billion to shareholders as early as this year, but would leave it without a highly profitable non-European partnership. ·