Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Big, big news this week was that Vodafone (finally!) confirmed that it was in talks with Verizon Communications over a possible sale of its 45% stake in Verizon Wireless for something like $1,300 million, or basically all the money in the world.
This admission is both the most awesome news and the most troubling.
First, the awesome part: Did you not see that dollar amount?!? This is like crazy money! And when something involves that much money it yet again de-values what money is really worth. And for someone without a lot of money, there is nothing better than having that small amount I have worth even less.
I mean, $130 billion for a 45% stake in Verizon Wireless? That makes the nation’s largest wireless carrier worth something like $1 billion trillion octabillion. Doesn’t that seem like a bit much for a company that only a couple of years ago began offering the iPhone and even worse is trying to get people to stop using unlimited data?
Perhaps I am ignoring the fact that Verizon Wireless generates more than $75 billion in revenues each year, which again just goes to further de-value what little money I have. When you are playing with that amount of “funny money” the thought of spending $130 billion to be able to get your hands on all that money sort-of does not seem so crazy. Except for the actual amount of money, which still seems ludicrous.
Plus, it has to just gall Verizon that it has not been able to garner all of that revenue from a wireless operator that since its inception 13 years ago has been using its name. All the while, Vodafone has been hanging out in London reaping the financial rewards of Verizon’s on-target decision making. Sounds like a pretty good gig if you can get it.
Of more concern to my feeble mind and wallet is that I hope this financial explosion does not impact Verizon’s dalliances with the Canadian telecom market. The thought that Verizon’s focus may now shift, along with all the change it scrounges up between the sofa cushions in the company break room, away from upsetting that delicate balance that has become the Canadian wireless market is disturbing.
Who is not enjoying the panty-bunching the thought of Verizon sticking its nose into Canada’s wireless business is generating amongst those established Canadian wireless carriers that seem to think consumers really want three-year contracts and unlimited data overages.
Going out on a financial limb here, I would guess that at most entering the Canadian market would cost Verizon no more than a couple of billion dollars, which in the grand scheme of things is mere pittance. A couple billion dollars? Pittance indeed.
(And maybe Verizon while you are at it you could spare a spare billion to purchase whatever is left of BlackBerry? In doing that you would basically have all of the Canadian telecom market in your hand. Could you imagine the amount of Molson beer spilt over having an American-based company with that much control over their wireless market.)
I know gaining control of your most valuable asset is a financial priority, but to be the thorn in the side of a whole country’s wireless industry is priceless. Verizon, I beg you not to let the throwing of hundreds of billions of dollars at one issue upset the fun and excitement that can come from just throwing a few billion at another.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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