Vodafone in talks to sell stake in Verizon Wireless

Verizon Wireless is the second-largest mobile network operator in the US.

New Statesman
Photograph: Getty Images.

The British telecommunications giant Vodafone Group is in talks to sell its 45 per cent stake in Verizon Wireless for about $130bn.

Verizon Wireless is the second-largest mobile network operator in the US with about 100 million customers.

By offloading its stake in Verizon Wireless, Vodafone will have the flexibility to acquire new assets in Europe, India, Turkey and Africa. Meanwhile, this acquisition will benefit Verizon Wireless to strengthen its mobile business.

Industry analysts observe that although Verizon could pay cash for the deal, this would slap Vodafone with a huge tax bill.

If the deal materialises, it could be the third-biggest of all time.

Verizon Wireless and AT&T own major share in the US mobile market. However, these firms are currently facing stringent competition from smaller firms like Sprint and T-Mobile USA.

Although the initial talks between Vodafone and Verizon commenced a few weeks ago, an  agreement is likely  to happen in September.

James Britton, an analyst at Nomura, was quoted by the Financial Times as saying: “Vodafone could be selling at what might prove to be the peak of Verizon Wireless’s prowess, before new competition comes into the market and at a valuation that is impressive.”

Meanwhile, Vodafone shares grew by 9 per cent to a 12-year high of 207 pence, while Verizon shares grew by 4 per cent.

Earlier in June, Verizon Wireless paid $7bn dividend to its parent companies. At the start of 2013, Vodafone agreed to buy German cable firm Kabel Deutschland for €7.7bn.