Could Verizon Wireless’ current joint custody quandary soon be solved?
Bloomberg reported this week that Verizon Communications, which controls 55% of Verizon Wireless, and Vodafone Group, which controls the remaining 45%, were again in talks over a potential deal for Verizon to gain full control over the wireless operator. Analysts quoted in the story said such a deal could be valued at up to $115 billion.
Verizon Wireless generated more than $75 billion in revenues in 2012, compared with just over $70 billion in 2011. The carrier also posted nearly $22 billion in operating income in 2012, compared with just over $18 billion in 2011.
Analysts noted that the current financial markets would seem open to such a large-scale transaction, and that such a deal could help Vodafone re-focus its efforts on picking up cable operations across Europe.
Verizon Communications has said for years that it was open to gaining full control over Verizon Wireless, though Vodafone has been quite happy with the current arrangement. That happiness was likely increased with Verizon Wireless recently throwing off $18.5 billion in dividend payments to its parent companies.
The potential full acquisition of Verizon Wireless has been a hot topic for investors, and a point that Verizon executives have seemingly grown tired of addressing. At an investor conference this week, Verizon CFO Fran Shammo reiterated the company’s stance that it was interested in gaining full control of Verizon Wireless, but that there was nothing new to report at this time.
Vodafone was reportedly close to exiting the venture in 2004 when the company was narrowly outbid by Cingular Wireless in acquiring AT&T Wireless Services. Vodafone had put in a $39 billion bid for AWS that would have seen Vodafone then exit its minority partnership in Verizon Wireless for full control of AWS. However, Cingular came in at the last minute with a $41 billion bid that eventually saw it gain control over its wireless rival.
Following that dalliance, both Verizon Communications and Vodafone repeatedly said they were thrilled that their partnership in Verizon Wireless would continue.
Vodafone’s stock (VOD) has recently been trading near a 52-week low, though it did receive a bounce this week following news of the potential deal. Verizon’s stock (VZ) also received a bump on the news, though was trading down slightly early Wednesday.
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