Something I did not know about the Verizon-Vodafone venture

[Laaate]

Verizon under $1bn pressure
1 February 2004

MOBILE phones giant Vodafone is putting pressure on American partner Verizon Communications to extend a deal governing dividends at the pair's American Verizon Wireless venture.


Under a deal struck when Verizon Wireless was created in 2000, the company pays out 70% of its net income in dividends. That meant payments of about US $1bn last year.


But the agreement expires at the end of the financial year and last week Ivan Seidenberg, Verizon Communications' chairman, signalled that he would be happy if Vodafone sold back its stake so it could seek a merger with AT&T Wireless.


Vodafone has the right to sell its stake to Verizon Communications at a <u>price set by a third party</u>. Despite Seidenberg's bullish attitude, analysts say the <u>$20bn</u> needed to buy the stake would stretch Verizon.


Vodafone's chief executive, Arun Sarin, is considering options, but analysts say it would be hard work if he opts to build up AT&T. Vodafone could bid for Verizon Communications, but this would be difficult to sell to investors.

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Well this news-to-me about the 3rd party determining the price of Voda's stake is comfroting to those of us in Vodafone's corner. That safeguards agasint Verizon enjoying the dictator's throne in the sale.