Verizon considers buying out Vodafone's share of Verizon Wireless

Verizon debating what to do with Vodafone

By Brian Sin/March 5, 2013 5:21 pm EST

Verizon is juggling its options to see how it should proceed with its joint venture with Vodafone. The two companies formed Verizon Wireless around 13 years ago. Verizon Wireless is now one of the top mobile service providers in the United States, and its shares are currently at $47.69 and are still growing. Apparently, since December, Verizon has been considering the future of its company and it's debating whether or not to completely merge with Vodafone, or to buy out Vodafone's share in Verizon Wireless.

As of right now, Vodafone owns a 45% stake in Verizon Wireless. To completely buy out Vodafone, Verizon would have to shell out around $115 billion. This would give Verizon full control of the mobile service provider, which is the most profitable service the company currently offers. Vodafone is unsure what to do with the money from the sale, but sources say that it will use the money to make various acquisitions all throughout Europe instead of returning the proceeds to its shareholders.

The other option is the merger. The full merger would combine Verizon's $130 billion value with Vodafone's $120 billion value to create one of the biggest mergers in history. The merger would require Verizon to move its operations to the United Kingdom, which would provide many tax benefits. Verizon would hold a 55-60% stake in the combined company. However, Verizon has expressed in the past its reluctance to move away from the United States, so similar issues might arise in future discussions.

The sources say that the option Verizon really wants is to completely buy out Vodafone's stake in Verizon Wireless. It wants to have full control of the mobile service provider and the freedom to make its own decisions. Fran Shammo, Verizon's CFO, stated at the Deutsche Bank AG that Verizon has always been interested in owning the entire U.S wireless company. Also according to Walt Piecyk, a BTIG analyst, "Seems like both parties are finally ready to end this saga."

[via Bloomberg]