Vodafone’s (VOD) Vote Of Confidence For Verizon (VZ)
Vodafone (VOD) will not sell part of its 45% stake in Verizon Wireless to Verizon (VZ) for $10 billion. It has the contractual right to do so, but that ends this week. According to Reuters, some analysts believe that position…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Vodafone (VOD) will not sell part of its 45% stake in Verizon Wireless to Verizon (VZ) for $10 billion. It has the contractual right to do so, but that ends this week. According to Reuters, some analysts believe that position is worth $45 billion.
Vodafone clearly thinks Verizon Wireless has a bright future. In the latest quarter, According to its 10-Q, Verizon’s wireless business had revenue of $10.8 billion and $3 billion in operating income. Both numbers were significant increases over the figures in the same quarter last year.
Verizon has a market cap of $125 billion. If the Vodafone piece of Verizon Wireless is worth $45 billion, that would give the entire operation an enterprise value of $100 billion, or 80% of Verizon’s total.
Vodafone knows it has a card to play. It can either hold out to get substantially more money for its piece, or use it as a bargaining chip to own a large equity stake in Verizon. Since Verizon does not have $45 billion to buy-out Vodafone, it should be an interesting dance.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
Contact [email protected] for any questions or corrections.
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.