USA TODAY International Edition
Verizon’s $ 130B deal
Finally, telecom giant to wholly own wireless unit; move reflects competition in mobile
The largest U. S. wireless carrier is now 100% American.
In one of the most expensive acquisition deals ever, U. K.- based Vodafone said Monday that it agreed to sell its 45% stake in Verizon Wireless to Verizon Communications for $ 130 billion in cash and stock.
Verizon will pay $ 58.9 billion in cash and $ 60.2 billion worth of Verizon shares, as well as $ 5 billion in loan notes. Verizon also will pay with its 23% stake in Vodafone Italy, worth about $ 3.5 billion, and assume $ 2.5 billion of Vodafone’s debt. The deal is expected to close in the first quarter of 2014.
Once the transaction is completed, Verizon will wholly own the wireless unit, giving the company more flexibility and options to manage growth in the lucrative mobile data market.
Verizon, a U. S. telecom giant that offers Internet, TV and phone services, owned 55% of Verizon Wireless and has wanted to buy the rest for years. But until now, it was never able to agree on a price with Vodafone.
At $ 130 billion, the deal would be the third- largest merger- and- acquisition transaction and would boost worldwide telecom deals to $ 224.3 billion this year, according to Thomson Reuters. Currently, the telecom deals that have been announced worldwide total $ 94.3 billion, up 28% from the same period last year.
“It’s a huge deal,” said Charles Golvin, an industry analyst at Forrester Research. “It reinforces ( the idea) that we live in a wireless world. It’s a recognition that ( Verizon) needs to control the ( wireless) assets entirely themselves.”
Verizon’s desire to fully own the wireless unit has intensified in recent years as consumers’ demand for all things mobile grows unabated.
And having complete autonomy in dictating the future of Verizon Wireless — and not being required to provide billions in costly dividends to other shareholders — was paramount for Verizon, Golvin said.
“There was never a question of if the deal would happen. It was a ques- tion of when,” he said. This deal “gives Verizon complete control over their own decision- making in terms of other investments.”
Vodafone’s stake and its presence in other markets around the world likely affected Verizon Wireless’ expansion ambitions, Golvin said. “They can now make those decisions completely independently.”
While nearly all adults in the U. S. carry a mobile phone, demand for other home devices that may require wireless connections — such as tablets, thermostats, refrigerators, home security equipment and cameras — is growing.
“Even in the saturated market, ( Verizon Wireless) continues to post growth figures,” said Bill Menezes, an industry analyst at research firm Gartner.
“They’re looking at a world where growth is coming from these ancillary devices.”