Monday, January 23, 2006

Verizon to Buy Out Vodafone?

The RED HERRING reports "Verizon could be on the verge of taking complete ownership of" Verizon Wireless. According to the article, "Verizon owns 55 percent of the mobile carrier, while Vodafone, the European mobile giant, owns the other 45 percent," and "Vodafone’s 10 largest shareholders are demanding the carrier sell its 45 percent ownership to Verizon and use the estimated $44.6 billion the sale would raise to bolster the carrier’s financial profile."

Bob House at Adventis said, "The shareholders see Vodafone having problems on a number of fronts in Europe and Japan, and they see the company at a strategic impasse in the U.S., so maybe it’s time to sell the Verizon Wireless stake. Vodafone does not have control of Verizon Wireless and Verizon has no interest in selling"

The article notes that "the timing of the shareholder demand could have been affected by a dividend arrangement between Vodafone and Verizon that runs out this year. Vodafone receives guaranteed dividend payments from Verizon Wireless."

House added, "There is a distinct prospect that the dividend flow to Vodafone will diminish if they don’t sell. It’s also clear that Verizon is interested in buying Vodafone’s share in Verizon Wireless, so it won’t be a huge surprise if that happens this year."