Verizon Sells C&W Stake
Verizon, one of the largest U.S. regional Bell operating companies (RBOCs), has been evaluating its international investments as it tries to find ways to pay down its $52 billion debt burden. It has publicly stated that it intends to work down some of this debt throughout 2002 and 2003.
Verizon currently holds other small stakes in several international carriers, including seven in Europe and 10 in Asia, says Tavis McCourt a vice president at Morgan Keegan & Company Inc. Last month, it sold its 20 percent stake in Telecom New Zealand Ltd. for about $770 million.
“There really isn’t any strategic relationship between C&W and Verizon,” says McCourt. “They only own a 5 percent stake, so they weren’t going to have much decision-making impact on the company. It makes sense.”
McCourt says that most of the U.S. RBOCs own minority stakes in international carriers. When cash was flowing and no one was worried about balance sheets, they made investments in these carriers with the hope of one day forging a global strategy. But now these carriers are much more focused on what is happening at home. They are concentrating on the U.S. market, and they are also paying down their debt.
SBC Communications Inc. (NYSE: SBC), which owns minority positions in several international carriers, agreed last month to sell off its 15 percent stake in French wireless provider, Groupe Cegetel to Vodafone Group plc (NYSE: VOD). If the deal is completed, SBC could walk away with $2.27 billion.
“Public investors want to see all the RBOCs lowering their debt," says McCourt. "Any movement toward that will help the stocks in the near term.”
Verizon was up $0.42 (1.10%) to $38.53 today in midday trading.
— Marguerite Reardon, Senior Editor, Light Reading