US incumbent Verizon Communications could buy out Vodafone’s 45% stake in their mobile joint venture Verizon Wireless.
Verizon Communications CEO Lowell McAdams told the Wall Street Journal that it would “love” to own the asset outright and that a…
US incumbent Verizon Communications could buy out Vodafone’s 45% stake in their mobile joint venture Verizon Wireless.
Verizon Communications CEO Lowell McAdams told the Wall Street Journal that it would “love” to own the asset outright and that a deal was “feasible”.
Vodafone declined to comment on the report.
McAdams said that there were lots of different ways a buyout could be done, and pointed to changes in the markets the companies operate in as perhaps providing a catalyst for a deal.
In a note Sanford Bernstein analyst Robin Bienenstock took this to be a reference to Vodafone’s worsening situation in Europe.
“We think that it would be a good moment for Vodafone to sell its stake in Verizon Wireless,” she said, saying that the US mobile market looks set to deteriorate for the joint venture with Sprint Nextel and Deutsche Telekom set to become stronger challengers with pending acquisitions.
However, Bienenstock said that the companies would find it difficult to agree on a price for the stake and doubted whether Verizon could buy Vodafone out completely. Bernstein suggests if Vodafone sold 60% of its stake it could net US$30bn. Should Verizon Communications want to acquire the whole stake it could expect to pay around US$60bn, but Bernstein warns that this would worsen its net debt to EBITDA ratio.
Verizon Wireless had revenues of US$111bn in 2011.
