Reports are indicating that Verizon (NYSE:VZ, news, filings) has been taking a serious look at buying out Vodafone's stake in Verizon Wireless. Sound familiar? It should, since the same rumor has bubbled to the surface every few weeks since winter began, or maybe since the decade began in some form. So what's new? Besides the fact that Vodafone's stock price is surging 5% in response, I mean...
But Bloomberg's report yesterday seems like mostly a rehash of what we already know. It's the major strategic alternative out there for both companies, they'd be derelict in their duty to shareholders not to consider the pros and cons regularly - formally or informally. The report also says no merger talks are currently going on and any discussions about the stake sale haven't even "progressed to substantial negotiations." In other words, it's not even a rumor - it's a few more details about a past rumor.
The most interesting new tidbit is that Verizon has supposedly even been looking at a full merger with Vodafone and talks back in December foundered over who would lead it and where they'd lead it from. Apparently the price tag was of lesser importance, but regardless I seriously doubt we will see this option materialize. Some regulator somewhere would find a reason to prevent it, and both companies surely know it. The buyout of Vodafone's 45% stake in Verizon Wireless seems far more likely than an outright merger.
But my guess right now is that the Verizon/Vodafone soap opera will be this year's un-resolvable cliffhanger. Sooner or later the Sprint, Clearwire, Softbank, and Dish situation will be worked out, and T-Mobile USA's move on Metro PCS may face some hurdles but if they really want it they'll make it happen. Yet it isn't clear what Verizon and Vodafone are ready to make a leap of faith large enough to make either kind of deal actually happen.
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