29 August 2013
| Kavit Majithia
Vodafone is in talks with Verizon Communications over the sale of its 45% stake in US telecoms group Verizon Wireless.
The deal, which has been rumoured for months, could
prove to be one of the largest M&A deals ever, with the
stake valued at over $100 billion.
According to the Financial Times, Verizon has recently
been putting increasing pressure on Vodafone to exit the US,
but talks in the past have fallen flat because of differing
valuations of the 45% stake.
Vodafone said this morning that "there is no certainty that an
agreement will be reached".
Any sale could be seen as a huge loss to the UK-based
group’s overall portfolio, with Verizon paying
Vodafone billions of dollars in dividends on a yearly
Verizon has been increasingly open, particularly this year, in
its desire to take full ownership of the company.
Goldman Sachs analysts valued the stake at $115 billion this
year, post tax, but the tax bill due on such a large
transaction could be a major problem.
Analysts believe Verizon could avoid the bill by buying out
Vodafone American Holdings, a unit set up by the UK operator
when the company bought US wireless carrier AirTouch in
This holding company also holds Vodafone’s Verizon
Wireless stake, and it is thought the US behemoth could save up
to $35 billion in taxes by taking this approach.
Verizon, with its 55% stake, has further claimed it could be a
lean year for paying out dividends to Vodafone through the
Vodafone CEO Vittorio Colao has claimed in the past that he
will sell the stake in Verizon Wireless at the right time and
at the right price.