Verizon presses Vodafone to sell out of venture

[SmArTeStChIlD421]

Verizon presses Vodafone to sell out of venture

By Andrew Parker and Andrew Edgecliffe-Johnson in London

Published: June 27 2008 03:00 | Last updated: June 27 2008 03:00

Verizon Communications has stepped up the pressure on Vodafone to sell out of Verizon Wireless, their mobile joint venture, saying that the second largest US telecoms company intends to be "the hunter" in future industry consolidation.

Ivan Seidenberg, chief executive of Verizon Communications, owner of 55 per cent of Verizon Wireless, told the Financial Times he would like full ownership of the US mobile operator.

It follows almost two years in which both groups have played down the prospect of ownership changes at Verizon Wireless after a failed effort in 2006 by Verizon Communications to buy its UK partner's 45 per cent stake.

It also comes as Arun Sarin, Vodafone's chief executive, is about to hand over to Vittorio Colao next month.

Mr Seidenberg cautioned against the idea of Vodafone selling its Verizon Wireless stake in the near-term but noted Mr Colao's impending promotion, saying: "Maybe he'll want to do something different."

The relationship between Verizon Communications and Vodafone, the world's largest mobile operator by revenue, has suffered from periodic tensions since the pair pooled their US wireless assets in 2000.

Mr Seidenberg, emphasising how Verizon Communications decided the operating strategy of Verizon Wireless, said in an interview in London: "Would I like to have 100 per cent of the earnings given we're doing 100 per cent of the work? Yeah, I would.

"Vodafone's been a great partner," he said.

"So the out has to come when Vodafone comes and says, 'Hey, we'd like to change our ownership level'. And when and if they do that, they know how to find me."

Analysts estimate that the value of Vodafone's stake has increased by $10bn to about $60bn in the past two years.

Verizon Wireless is set to become the largest US mobile operator after agreeing a $28.1bn deal this month to buy Alltel, a smaller wireless business.

Mr Seidenberg revealed that Mr Sarin had wanted Verizon Wireless to purchase Alltel last year when it was bought by the Texas Pacific Group and the private equity arm of investment bank Goldman Sachs.

Verizon Communications, whose representatives have a majority of the seats on the Verizon Wireless board, decided against getting into a bidding war with private equity.

Mr Seidenberg stressed that his company had the final say over when Verizon Wireless would resume dividend payments, a source of contention for some Vodafone investors.

However, he said that net debt did not necessarily have to reach zero before any payments could be made.

FT.com / Home UK / UK - Verizon presses Vodafone to sell out of venture

[KyleAndMelissa22]

I think this would be a great move for Verizon,
they wouldn't have pressure to put up LTE as fast,
plus CDMA would continue to hang around even longer.

[cheddar]

I've always wondered what kinda of "non-compete" clauses exist between Verizon, Verizon Wireless, and Vodafone. It just seems like Verizon could have found a way to put pressure on Vodafone otherwise. If there weren't any non-compete's Verizon could have bought the 700mhz spectrum instead of Verizon Wireless.

[bobolito]

Originally Posted by KyleAndMelissa22

I think this would be a great move for Verizon,
they wouldn't have pressure to put up LTE as fast,
plus CDMA would continue to hang around even longer.

I don't think that will make any difference. Verizon already has committed a timetable for LTE.

[cheddar]

Originally Posted by bobolito

I don't think that will make any difference. Verizon already has committed a timetable for LTE.

I meant in relation to pushing Vodafone out of Verizon Wireless. Verizon owns a majority share of Verizon Wireless but not all of it. I was just wondering what Verizon could legally/contractually do to push Vodafone to sell their stake. I didn't mean it as a way of avoiding/weakening LTE.

[KyleAndMelissa22]

I thought a big reason Verizon committed to LTE is so that it could be compatible with it's Vodafone counterpart.
If Verizon lets Vodafone go, then LTE will definitely still happen, but not as fast, IMO.

In other words, it'll be a more "long-term" evolution.

[bobolito]

Yes, one of the reasons for Verizon going LTE was to be compatibe with Vodafone. But Vodafone is not in every country in the world. Let's be realistic. Verizon is thinking about its own future, and Verizon is growing tired of looking at how AT&T touts how their customers can go overseas and use their phones. That's a marketing advantage that Verizon wants to take away from AT&T. But this isn't just about Vodafone. Verizon will be compatible with almost every carrier in the world eventually, just like AT&T and T-Mobile. So basically this is like saying "welcome aboard" to Verizon.

[Blue4Life]

Wirelessly posted (Mozilla/5.0 (SymbianOS/9.1; U; en-us) AppleWebKit/413 (KHTML, like Gecko) Safari/413 es70)

If Vodafone's shareholders are relatively happy with the return on their investment, why would they sell their 45% stake in VZW? I believe the only chance of that happening is if Vodafone was planning on acquiring a major U.S. carrier (like they attempted with their $38 billion bid for the former AT&T Wireless) or if Verizon buys Vodafone's 45% stake at a premium price.

[SmArTeStChIlD421]

Vodafone may not be in all the countries in the world but isn't it one of the largest international carriers???

[bobolito]

Yes, they are.

[SmArTeStChIlD421]

So there are two reasons why Verizon would wanna sync with "everyone else" (loosely speaking):

1. Vodafone is a motivator to be just like the mommy in this venture
2. no portability for CDMA customers......or at least portability is low and getting smaller

when they get rid of Vodafone they will have lost a reason.......but AT&T mocking Verizon's technology standard could be enough to bring this project along just as fast as if Vodafone were still there whispering over Verizon's shoulder