VODAFONE shares rose by almost seven per cent yesterday on suggestions the company is ready to sell out of its joint venture with Verizon Communications, or even merge with the US operator.
Reports from the US on Tuesday night claimed that Verizon and Vodafone had recently met to discuss resolving the ownership of Verizon Wireless (VZW), the country’s second-largest mobile phone network. Vodafone owns 45 per cent of VZW compared to Verizon’s 55 per cent.
One possibility reportedly discussed was a merger of the two. This would be history’s biggest merger, although it is now seen as unlikely. A sale of Vodafone’s stake is more likely, although the firms are not in active discussions.
Despite the joint venture’s success in the past few years, it has been a source of tension between the two companies. Verizon boss Lowell McAdam has made clear his desire to buy out Vodafone’s stake, while the FTSE 100 firm has faced uncertainty over dividend payouts from VZW.
Vodafone selling its stake could net it around £50bn, according to analysts at Espirito Santo, who said the company could use the cash to embark on an acquisition spree.
Vodafone’s chief executive Vittorio Colao said last week that acquisitions are a possibility as he aims to expand the company’s reach into broadband and pay-TV, and that he has an open mind on the situation with Verizon.
The parties did not comment.