Vodafone to pay investors £54bn

Oliver Smith
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Windfall for shareholders after Verizon Wireless stake sale sealed

VODAFONE will pass a massive £54bn windfall to its shareholders after agreeing a record-breaking deal with American telecoms group Verizon.

The £84bn deal – the second largest in corporate history, according to Dealogic – for Vodafone’s stake in the largest US mobile network Verizon Wireless, was agreed by the telecoms giants’ boards on Sunday.

Vodafone will return 71 per cent of the proceeds back to shareholders, it said yesterday.

“This is a very substantial return to individual shareholders and investment funds that are relied upon by savers and pensioners in the UK, US and internationally, rewarding our investors for their long-term support.” said Vodafone chief exec Vittorio Colao in a statement yesterday.

Under the terms of the deal, Vodafone will receive £38bn in cash, £39bn in Verizon stock and an additional £7.1bn comprised of smaller transactions, in return for its 45 per cent stake in Verizon Wireless.

Of the £30bn not returned to shareholders Vodafone will be investing £6bn on improving 4G infrastructure for European markets, and £20bn will be used to pay down the company’s debt. The firm dubbed its infrastructure spending Project Spring.

“With Verizon Wireless growth peeled away, it is critical for Vodafone to stabilise their net income and free cash flow across the core European mobile. Accelerating 4G investments to establish competitive advantage and regain pricing power seems a logical first step,” said Jerry Dellis, an analyst at Jefferies.

A deal between Vodafone and Verizon, whose partnership dates back to Vodafone’s acquisition of Airtouch in 1999, has been rumoured for many years, with reports of the two companies coming close to a deal in 2004, 2009 and in April this year.

Tax liabilities were reported as the reason for no deal being reached, but Vodafone yesterday quashed fears of a substantial tax bill, citing its structuring of the deal through the business’s holding company in the Netherlands.

Vodafone’s board was advised on the deal by Goldman Sachs and UBS, while the Verizon board was advised by Guggenheim, Paul J Taubman, JP Morgan Securities, Morgan Stanley, Barclays and Bank of America Merrill Lynch.

The final financial transactions between the companies are expected to be completed in early 2014.


1. $172bn - Vodafone Mannesmann (November 1999)

2. $130bn - Vodafone Verizon Wireless stake sale (Sept 2013)

3. $112bn - AOL Times Warner (January 2000)

4. $111.8bn - Pfizer Warner-Lambert (November 1999)

5. $111.3bn - Philip Morris (January 2008)

6. $101.9bn - AT&T BellSouth (Mar 2006)

7. $95.6bn - RBS ABN Amro (Apr 2007)

8. $85.6bn - Exxon Mobil (Dec 1998)

9. $79.6bn - Glaxo SmithKline Beecham (Jan 2000)

10. $76.2bn - SBC Ameritech (May 1998)