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Vodafone Agrees to $130B Verizon Stake Sale

Ray Le Maistre
9/2/2013

Vodafone has agreed to sell its 45 percent stake in Verizon Wireless in a stock and cash deal worth $130 billion.

Verizon Communications Inc. (NYSE: VZ) is to hand over $58.9 billion in cash and stock worth $60.2 billion to Vodafone Group plc (NYSE: VOD) to secure total ownership of Verizon Wireless . The remaining $10 billion comprises Verizon's 23 percent stake in Vodafone Italy (valued at $3.5 billion), $5 billion in loan notes and $2.5 billion in Vodafone liabilities related to Verizon Wireless that will be taken on by Verizon.

The deal is expected to close during the first quarter of 2014.

Vodafone is to hand all the Verizon stock and $23.9 billion in cash, a total $84 billion (or 71 percent of the net proceeds of the deal) to its shareholders, the equivalent of 112 pence (sterling) per Vodafone share.

Of the remaining $35 billion in cash, Vodafone is pumping £6 billion ($9.3 billion) into a three-year investment program that the operator is calling Project Spring.

Vodafone investors will be cheering. But what happens once the deal closes? Will Vodafone seek out more acquisitions or become a takeover target itself? (See Vodafone: Eat or Be Eaten?)

— Ray Le Maistre, Editor-in-Chief, Light Reading

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DOShea
DOShea
9/4/2013 | 12:16:17 AM
Interesting week
Interesting that two things already happened this week that probably should have happened years ago, one being Verizon buying out the Vodafone stake, the other being Microsoft buying a mobile device maker. Who's next to join the better-late-than-never club?
RitchBlasi
RitchBlasi
9/3/2013 | 11:36:03 AM
VZ on the move
Sarah, from my understanding there are some regulatory barriers that preclude VZ from totally combining operations...it was that way at AT&T when I was there. And even after this there may still be some remaining. This is much more than a financial thing icw operations and I expect VZ to take advantage of some of its freedoms as quickly as possible.
kaop
kaop
9/3/2013 | 10:45:03 AM
Re: How will this impact Verizon?
wanlord:  This is mainly a financial deal and should have minimal effect on the operations.  Granted this allows Verizon total voting rights in future directions of the company.
Sarah Thomas
Sarah Thomas
9/3/2013 | 10:22:08 AM
Re: How will this impact Verizon?
It's crazy that it hasn't yet -- and that it hasn't provide a unified view on customer service calls.
mendyk
mendyk
9/3/2013 | 10:19:19 AM
Re: How will this impact Verizon?
What's the over/under on how long it takes for VZ to deliver a single bill for mobile and wireline services?
Carol Wilson
Carol Wilson
9/3/2013 | 10:18:36 AM
Re: How will this impact Verizon?
This is certainly the message Verizon is sending out - and again, I'll be intrigued to see how they actually capitalize on this, and whether we see a lot of innovative combinations of, for instance, their cloud services and their mobile service. I still think it will be services that extend what some of their industry verticals do -- such as healthcare and public safety - that may make the combination more interesting and more profitable. 
Sarah Thomas
Sarah Thomas
9/3/2013 | 9:53:59 AM
Re: How will this impact Verizon?
That prediction makes a lot sense, wanlord, and I think Verizon was moving in that direction anyway. But I'm not sure I see why Vodafone's involvement precluded Verizon from more tightly integrating before? 
Sarah Thomas
Sarah Thomas
9/3/2013 | 9:52:29 AM
Re: How will this impact Verizon?
Thanks for sharing, kaop. I agree, assuming subscriptions also include M2M devices. Not all of those will involve a monthly recurring fee, but will still include connectivity and be important to Verizon and others as they look to keep growing.
wanlord
wanlord
9/3/2013 | 9:32:34 AM
Re: How will this impact Verizon?
I think the biggest impact is internal. This lets VZ become more of a ONE Verizon where they couldn't integrate Wireless into the bigger telco before. Networks, systems, processes, people. The impact will be to employees with across the board lay offs. 130B is a big expense so cuts have to come from somewhere.
kaop
kaop
9/2/2013 | 10:14:28 PM
Re: How will this impact Verizon?
According to the June 2013 Mobility Report by Ericsson:  The new measure of mobile growth is subscriptions not subscribers.  "There is a large difference between the number of subscriptions and subscribers.  This is due to the fact that many subscribers have several subscriptions...Consequently, subscription penetration can easily reach above 100 percent, which is the case in many countries today".

Source: http://www.ericsson.com/res/docs/2013/ericsson-mobility-report-june-2013.pdf
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