Vodafone and Verizon in talks over wireless sale

Stephen Beard Aug 29, 2013
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Vodafone and Verizon in talks over wireless sale

Stephen Beard Aug 29, 2013
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Talks over a major telecoms deal are on again. 

The British cell phone giant Vodaphone has resumed negotiations over its stake in America’s biggest mobile operator, Verizon Wireless.

Verizon has been chafing to buy Vodaphone’s 45 percent stake for years. The U.S. company wants the freedom to expand its network, make new acquisitions, and run its business without constantly deferring to a large, secondary partner. 

In the past, the stumbling block has been the price. Verizon has offered around $100 billion for the stake, while Vodaphone has insisted on much more since its Verizon shares have provided a large and reliable stream of revenue. 

Suddenly, the two sides seem ready to do a deal. Verizon would need to borrow tens of billions of dollars to finance the purchase, and the pressure is on the company to borrow that money now before interest rates rise further.  

And selling now may seem sensible to Vodaphone. Chris Green, an analyst with the consulting firm the Davies Murphy Group, says Vodaphone may be worried about the long term value of its investment in America’s mobile market.

“There’s uncertainty over the future of mobile phone network revenues in the U.S., as competition and consolidation increase in the marketplace,” says Green.

That competition is already taking its toll. Verizon’s share price has fallen 14 percent since April.

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