Verizon plays down Vodafone tax issue over US venture deal

VODAFONE came under new pressure to exit its lucrative US venture yesterday when its partner Verizon Communications said the British firm would not see a significant tax bill from a sale.

Verizon, which owns 55 per cent of US mobile operator Verizon Wireless (VZW) to Vodafone’s 45 per cent, has repeatedly made overtures about buying the rest of the company, but analysts have put the capital gains bill Vodafone would face in the tens of billions of dollars. The tax issue has even led to speculation that Vodafone itself could be sold to get round the problem.

However, Verizon’s chief financial officer Francis Shammo said yesterday he was “extremely confident that such a transaction could be accomplished in a manner that is very tax-efficient”.

His comments sent Vodafone shares as much as four per cent up before they closed two per cent higher. Investors are rubbing their hands with glee over the prospect of a big payday if Vodafone sells its stake in VZW, which has been valued at more than £100bn.

The value of VZW was underlined yesterday when Verizon revealed that the network had added 677,000 retail customers in the first three months of the year, ahead of analyst expectations, and that its margins had improved.