Vodafone Shares Rise on AT&T/T-Mobile Deal
That's because the deal is expected to be good news for Verizon Wireless , and Vodafone owns 45 percent of Verizon Wireless. Verizon Communications Inc. (NYSE: VZ) owns the remaining 55 percent.
It is thought that Verizon Wireless would benefit from AT&T buying T-Mobile because there would be one less competitor in the market, and AT&T and T-Mobile are likely to become mired in their efforts to win regulatory approval for their deal over the next year, as The Wall Street Journal reports. (See AT&T/T-Mobile: Riddled With Regulatory Risk.)
Also, as Heavy Reading Senior Analyst Gabriel Brown points out, AT&T's $39 billion offer for T-Mobile will help to establish a valuation for Vodafone's stake in Verizon Wireless, the lack of which has frustrated some Vodafone investors. But the picture is not entirely rosy for Vodafone. Brown also noted that if Verizon responds to AT&T's move with an acquisition of its own, Verizon might have to take on more debt to do it, and that could jeopardize the dividend payments to Vodafone that are supposed to start at the end of 2012. Such an outcome would certainly not go down well with some Vodafone investors.
For more of Light Reading Mobile's coverage of the AT&T/T-Mobile deal, please see these stories:
— Michelle Donegan, European Editor, Light Reading Mobile