Vodafone signals it will sell 45% stake in Verizon
U.S.-based Verizon in talks to buy back shares at potential cost of $100B
Verizon Communications is in talks with stakeholder Vodafone PLC, which is looking to sell its 45 per cent stake in the U.S. wireless giant as it eyes expansion in Europe.
U.K.-based Vodafone, one of the world's largest cellphone companies, confirmed Thursday it is talking to Verizon Communications about selling its U.S. operations.
Vodafone is mulling options for its 45 per cent stake in Verizon Wireless, of which Verizon Communications owns the other 55 per cent.
Analysts have suggested Verizon wants to pay around $100 billion US for Vodafone's stake, although reports have said that Vodafone is pressing for as much as $130 billion US.
Rumours have long circulated that Vodafone was looking to sell its Verizon stake and leave the U.S. market. Vodafone is instead expanding its operations in Europe.
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Verizon, meanwhile, remains at the centre of controversy over its possible expansion into Canada. Wireless providers Bell, Rogers and Telus have joined forces against the move, and for weeks have been running an expensive, though perhaps unsuccessful, ad campaign in hope of swaying political and public opinion against the U.S. giant.
Bell said the possible Vodafone deal supports the coalition’s arguments against Verizon.
"A company like Verizon with the scale to consider an acquisition of approximately US$130 billion dollars does not need any handouts from Ottawa to compete in the Canadian wireless market," the company said in a statement.
The coalition claims Ottawa is giving Verizon favourable treatment as it eyes a possible purchase of small carriers Mobilicity and Wind Mobile, and participation in the upcoming auction of wireless spectrum.
The government needs to "step back, recognize there is an issue here and have a dialogue about it," said Mirko Bibic, Bell's chief legal and regulatory officer, during an appearance on CBC's The Lang and O'Leary Exchange.
The message of the ad campaign is "punching through" he added, citing recent polls and expressions of concern about Verizon from groups including the NDP, the Fraser Institute, pensioners and union leaders.
Verizon stock was up almost 3 per cent in New York, rising $1.26 US to close at $47.83 US.
Vodafone is pushing ahead with a takeover bid for Germany's biggest cable operator, Kabel Deutschland, as part of its strategy to dominate media services in Europe, its biggest market.
If approved by regulators, Vodafone would gain 32.4 million mobile, five million broadband and 7.6 million direct TV customers in Germany. It has 19.2 million mobile customers in the U.K., and it has been under intense competition.
Any proceeds from a Verizon Wireless sale would add to its war chest for further acquisition or allow the company to pay down debt.
But analysts have been cautious, wary of Vodafone's track record on mergers. In 2000, in what was the largest corporate merger ever, the company took over Mannesmann AG in a stock-swap deal valued at $180 billion. Many analysts at the time believed the German company was overvalued.
With files from Associated Press