Vodafone’s (VOD) Vote Of Confidence For Verizon (VZ)
August 8, 2007 by Douglas A. McIntyreVodafone (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.
Take This Retirement Quiz To Get Matched With An Advisor Now (Sponsored)
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.