Verizon Communications moved one step closer in picking up full control of Verizon Wireless as the Federal Communications Commission approved the telecom giant’s $130 billion purchase of Vodafone Group’s 45% stake in the wireless venture.
The FCC noted the approval was its first in applying “new foreign ownership rules” designed to speed up the review process and encourage international investment in U.S. wireless networks. Those rules took effect in August.
“This is an excellent example of the type of process reform the FCC is seeking to accomplish. In this instance, the International Bureau was able to expeditiously grant the declaratory ruling by public notice after completing its public interest review,” said International Bureau Chief Mindel De La Torre in a statement.
As it pertains to the Verizon/Vodafone deal, the FCC said it has approved Verizon to have aggregate foreign ownership in excess of the previous 25% benchmark, while foreign investors will have no more than a 5% stake in Verizon post-deal. Verizon announced in early September plans to acquire Vodafone’s stake in Verizon Wireless for $130 billion. The deal also called for Verizon to sell its 23% interest in Vodafone Italy for $3.5 billion, thereby providing Vodafone with full ownership of Vodafone Italy.
The transaction, which had been rumored nearly since Verizon Wireless was formed in 2000, puts Verizon on more equal footing with domestic rival AT&T, which has full control over AT&T Mobility. While AT&T Mobility has recently not been able to match Verizon Wireless’ financial strength, AT&T is able to glean the full financial benefits from its wireless operations.
“Full ownership of Verizon Wireless strengthens our ability to provide an outstanding consumer experience with advanced mobile devices, first-in-our-class network quality and reliability, and new products and services that leverage and integrate our global communications technologies,” noted Randal Milch, EVP of public policy and general counsel of Verizon, in a statement.
The deal still requires approval from company shareholders, though Verizon expects closing to happen during the first quarter of next year.
The FCC’s quick action on the deal could also come into play for AT&T as the telecom operator has been rumored to be seeking to acquire Vodafone and its international operations. Those rumors have suggested a possible deal valued at more than $250 billion that would give AT&T control of Vodafone’s telecom operations in 21 countries across Europe, the Middle East, Africa, Asia-Pacific and – for now – the United States. Vodafone ended its most recent quarter with more than 450 million wireless customers, while AT&T ended the quarter with more than 100 million wireless customers.
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