Optical/IP Networks

Verizon: All Together Now?

The time could be right for Verizon Communications Inc. (NYSE: VZ)'s reported $40 billion dollar bid to buy its erstwhile partner Vodafone Group plc (NYSE: VOD) out of their Verizon Wireless joint venture, according to analysts.

In the past, Verizon has made no secret of its interest in buying out Vodafone's stake in the wireless venture. So Sunday's report from the U.K. newspaper Business that Verizon has put forward an informal $40 billion bid for the operation isn't that surprising, especially now that AT&T Inc. (NYSE: T)'s bid for BellSouth Corp. (NYSE: BLS) will consolidate the operations of Verizon Wireless's major U.S. rival, Cingular Wireless . (See Cingular's Converged Future.)

"Any time is a good time to bid for Verizon Wireless," says Roger Entner, analyst at Ovum Ltd. . "It's a great organization and growing very nicely."

The stumbling block to Verizon's ambitions has always been that Vodafone didn't want to sell its stake in the operator, which has been a nice little earner for the group. (See Vodafone Sticks With Verizon.)

Tim Farrar, president of Telecom, Media and Finance Associates, Inc., notes that Vodafone's recent sell-off of its Japanese assets could signal a new willingness to divest itself of assets from the operator.

Despite the financial benefits, Farrar says, Verizon may no longer fit with Vodafone's business plan, especially as the U.S. operator has never made the switch from CDMA to GSM, which is the cellular standard Vodafone uses in the rest of its global operations.

"They're not getting the economies of scale from Verizon Wireless, because it is a different platform... We could see them focus on their core European operations and emerging markets," Farrar says.

A spokesperson from Verizon says there is no official comment on this latest round of buyout rumors.

— Dan Jones, Site Editor, Unstrung

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