Verizon moots buying Vodafone out of Verizon Wireless: report

Verizon chief executive Lowell McAdam has reportedly once again raised the prospect of buying Vodafone out of Verizon Wireless, saying the move is feasible if not absolutely necessary.

In an interview with Dow Jones Newswires, McAdam said Verizon (New York, USA) “would love to own all of that asset”, but insisted the partnership between Verizon and Vodafone (Newbury, UK) was functioning well.

Verizon controls 55% of Verizon Wireless, with Vodafone owning the remainder.

Verizon chief executive Lowell McAdam has reportedly once again raised the prospect of buying Vodafone out of Verizon Wireless, saying the move is feasible if not absolutely necessary.

In an interview with Dow Jones Newswires, McAdam said Verizon (New York, USA) “would love to own all of that asset”, but insisted the partnership between Verizon and Vodafone (Newbury, UK) was functioning well.

Verizon controls 55% of Verizon Wireless, with Vodafone owning the remainder.

The venture was set up in 2000, when the mobile-phone industry was relatively immature, and has since taken the number-one position in an increasingly developed market.

Verizon attempted to take full control of Verizon Wireless in 2006 but its move encountered fierce resistance from Vodafone.

The transaction could cost as much as $100 billion, according to analysts cited by Dow Jones Newswires, but McAdam appears to believe Verizon has the financial resources to pull off a takeover, referring to the growing strength of the operator’s fixed-line business.

Vodafone investors may believe now is the time to sell – competition in the US market could intensify this year, with Japan’s Softbank (Tokyo, Japan) looking to buy Sprint (Overland Park, USA) and T-Mobile USA (Bellevue, USA) likely to merge with MetroPCS (Richardson, USA).

Nevertheless, while Vodafone has not commented on the deal, Vittorio Colao, the chief executive, has previously remarked that Verizon Wireless represents a good investment while operations elsewhere are struggling.

Verizon Wireless reported year-on-year revenue growth of 7.5% in the third quarter, providing a rare bright spot for Vodafone.

Most of the UK operator’s European operations – from which it derives about three quarters of its revenue – have suffered amid the recessionary conditions.

Competition remains strong and regulatory authorities have show scant sympathy for telecoms players, cutting mobile termination and roaming rates and offering little reassurance when it comes to next-generation broadband investments.

Rivalry has also driven up the price Vodafone has paid for 4G spectrum in recent auction, including one held in the Netherlands last month in which the operator shelled out nearly $1.4 billion for its concessions.

No doubt, the sale of its 45% stake in Verizon Wireless would generate a substantial windfall for Vodafone, but finding somewhere to invest the money could be a major challenge.