Verizon denies interest in Vodafone bid

Verizon has rebuffed reports that it is planning a joint bid with AT&T for UK operator Vodafone.

Earlier this week, the UK’s Financial Times newspaper cited “usually reliable people” as saying that AT&T (Dallas, TX, USA) and Verizon (New York City, NY, USA) were preparing a complex $245 billion bid that would see Verizon take full control of Verizon Wireless – its mobile joint venture with Vodafone (Newbury, UK) – while AT&T acquired the rest of Vodafone’s assets.

In a statement, Verizon said it does not “currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others”.

Nevertheless, the US operator said it remained interested in acquiring Vodafone’s 45% stake in Verizon Wireless.

Vodafone’s stock rose by as much as 6.1% on Tuesday, following publication of the Financial Times story, but fell by 3.2% in early-hours trading on Wednesday, after Verizon had denied interest in a joint bid.

“We view Vodafone as a very reluctant seller,” wrote Robin Bienenstock, an analyst with Sanford C. Bernstein, reports Bloomberg.

With its European operations struggling, Vodafone’s stake in Verizon Wireless remains its most valuable asset, worth as much $115 billion, according to various analyst estimates.

Some Vodafone shareholders might welcome a sale on such terms, with competition in the US market likely to intensify if a merger of T-Mobile USA (Bellevue, WA, USA) and MetroPCS (Richardson, TX, USA) goes ahead.

But Vodafone’s management would naturally be wary of quitting a market that is still growing and relatively lightly regulated, given the shortage of other attractive investment opportunities in the telecoms sector.

Moreover, Vodafone could face a substantial capital gains tax on any sale because Verizon Wireless is now worth so much more than when it was created in 2000.

Neither Vodafone nor AT&T had commented on the Financial Times story at the time of writing.

Earlier this year, AT&T was said to be considering an entry into the European market, with UK mobile operator EE (Hatfield, UK) and Dutch incumbent KPN (The Hague, Netherlands) cited as possible acquisition targets.

AT&T chief executive Randall Stephenson had reportedly expressed interest in taking US practices into Europe, but analysts had questioned the rationale for such a move given the fiercely competitive and heavily regulated nature of most European markets.

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