Is Verizon Contemplating an Acquisition?
Shares of Vodafone (NASDAQ:VOD) rose 3 percent on Monday afternoon as Verizon’s (NYSE:VZ) Chief Executive Officer Lowell McAdam hinted at a deal that would leave the United States’ largest wireless service provider the sole owner of Verizon Wireless. Currently, Vodafone holds a 45 percent stake in the wireless partnership that dates back to 2000.
Speaking at a Citigroup investment conference ahead of the Consumer Electronics Show in Las Vegas, McAdam said he believed the company, which owns the remaining 55 percent of the partnership, could to acquire Vodafone’s stake. “We have always said we would love to own all of that asset,” he added, according to The Wall Street Journal.
When the deal was sealed, wireless phone service was relatively new, and the partnership enabled both partners to pool together resources at a time when a great deal of money was needed to build up the operation. However, “it has become awkward now that the business is taking the lead role in growth for the telecom companies,” reported the Journal. The fact that Verizon Wireless distributed a total of $18.5 billion in dividend payouts to its stakeholders last year made the acquisition all the more appealing.
Save time and make money with our LOWEST ADVERTISED PRICE EVER to help you achieve your financial goals in 2013. This is a LIMITED TIME OFFER, so get your Stock Picker Newsletter now!
This is Verizon’s second attempt to buy out Vodafone; in 2006, it made an offer that was rejected by the British network operator. Analysts still question whether the deal is feasible as the venture’s worth has been estimated at approximately $100 billion and Verizon has $53 billion in debt. But McAdam believes a deal is possible. “Our wireline business is getting stronger and as that gets stronger, it makes it easier,” he said.
Offering further support of this claim, the company’s chief executive also announced that Verizon had added 2.1 million net subscribers in the fourth quarter, which was the joint venture’s “best quarter in history.” But comparatively, 2013 is expected to be “relatively flat.”
There was more bad news. Even with the impressive customer additions, the company hinted that it had a difficult quarter; it plans to take $9 to $10 billion in charges for the three-month period, stemming from pension liabilities and Hurricane Sandy-related costs. Verizon will report earnings on January 22.
Don’t Miss: Will This Move End Smartphone Patent Wars?