Vodafone pressured on Verizon stakehold
TEXT OF INTERVIEW
Doug Krizner: Verizon Wireless is jointly owned by Verizon Communications and the British mobile phone company Vodafone. Vodafone owns 45 percent, Verizon Communications the rest. Tomorrow, Vodafone shareholders will discuss what to do about Verizon Wireless.
Andrew Parker is a reporter with the Financial Times in London. Andrew, what the relationship like between Vodafone and Verizon Communication?
Andrew Parker: Well, on one level it's a very good working relationship. I mean, Verizon Wireless is one of the best-performing mobile operators in the United States. Having said all of that, the relationship between Vodafone and Verizon Communications is a little uneasy. Verizon Communications owns 55 percent of Verizon Wireless — and bluntly, would like to own 100 percent.
Krizner: Now, we're given to understand that one of the shareholders in Vodafone has been applying a bit of pressure on the company — on Vodafone itself — to spin off this stake in Verizon Wireless. Do you think they'll succeed?
Parker: No, the blunt truth of it is, they won't succeed. The shareholder has got a resolution at Vodafone's annual meeting tomorrow — that's Tuesday — calling for the spin-off of the 45 percent stake.
The reason it's calling for that is it's said this stake is a passive investment, and it's critical of it for being so. By that it means Vodafone currently is not receiving a dividend from Verizon Wireless because the cash flow coming out of the mobile operation is being used to pay down debt.
And so ECS, this small Vodafone shareholder, is saying, "Look, spin it off, and let's realize greater value for shareholders." But they aren't going to attract majority support from Vodafone's investors for that position.
Krizner: That is Andrew Parker with Financial Times in London.