Vodafone boss cool on merger speculation

 
City A.M. Reporter
A merger between the mobile phone group Vodafone and Verizon Communications would be less likely than other alternatives for the parents of Verizon Wireless, the chief executive of Vodafone said yesterday.

Vodafone owns a 45 per cent stake in Verizon Wireless, which is controlled by its majority parent Verizon Communications; but because Vodafone does not receive a dividend from the venture, the UK operator has been under pressure from shareholders to find an alternative.

Some analysts have speculated that Verizon and Vodafone could merge to resolve the situation.

But Vodafone CEO Vittorio Colao said at a Goldman Sachs conference that, while he would keep an open mind, such a merger would probably be too complex compared with options such as a complete split with Verizon or a Verizon Wireless dividend payment to both its parents.

“Theoretically, conceptually, it's an option, but practically it's less likely than the other two,” Colao told the audience.

There have been reports that shareholders are in line for a dividend windfall following

secret talks between Colao, and Ivan Seidenberg, head of US group Verizon.
The two men are said to have met recently in New York to discuss the future of Vodafone’s stake in Verizon Wireless, which suspended dividend payments to Vodafone in 2005.

The suspension was designed to force Vodafone to sell its holding in Verizon Wireless to Seidenberg for an estimated £33bn. But Vodafone has refused to sell.

Instead, Colao has been pressing Seidenberg for a resumption of dividends in 2012, when Verizon Wireless finishes repaying a loan following its £20bn acquisition of rival in 2009.