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View Full Version : Verizon Communications Gains Full Ownership of Verizon Wireless With $130 Billion Vodafone Deal




MacRumors
Sep 2, 2013, 01:19 PM
http://images.macrumors.com/im/macrumorsthreadlogo.gif (http://www.macrumors.com/2013/09/02/verizon-communications-gains-full-ownership-of-verizon-wireless-with-130-billion-vodafone-deal/)


Verizon Communications and Vodafone today announced (http://newscenter.verizon.com/corporate/news-articles/2013/09-02-verizon-to-acquire-vodafone-interest-in-verizon-wireless/) an agreement that will see Verizon gaining full control over Verizon Wireless after buying Vodafone's 45 percent stake in the company for $130 billion.

http://images.macrumors.com/article-new/2013/09/verizon_vodafone_afp.jpg
The deal, which was unanimously approved by the boards of directors of both companies, consists of both cash and stock. It will give Verizon 100 percent ownership of the company, allowing it to be "better equipped to take advantage of the changing competitive dynamics in the market." Verizon chairman and CEO Lowell McAdam had the following to say about the deal:"This transaction will enhance value across platforms and allow Verizon to operate more efficiently, so we can continue to focus on producing more seamless and integrated products and solutions for our customers. We believe full ownership will provide increased opportunities in the enterprise and consumer wireline markets."For Verizon, the deal will mean that the company has full access to the wireless unit's cash, allowing it to to expand further within the United States. Reuters has noted (http://www.reuters.com/article/2013/09/02/us-vodafone-verizon-idUSBRE97S08C20130902) that a major focus of this expansion will be on 4G networks. Verizon's 4G network is currently the largest in the United States and is available in over 500 markets across the country, with a potential 298 million subscribers, or 95% of the U.S. population.

Following the sell to Verizon, Vodafone plans on a £6 billion investment plan nicknamed "Project Spring", which will speed up the introduction of 4G networks in the United Kingdom, which up till now has been a relatively slow process, as well as increase investment in installing fibre optic cables, providing faster broadband services to customers. The plan will also strengthen Vodafone's retail presence in the United Kingdom and develop mobile payment services, which are currently not offered on the carrier.

The deal between the two companies is expected to close during the first quarter of 2014 and should have little impact on Verizon and Vodafone customers.

Article Link: Verizon Communications Gains Full Ownership of Verizon Wireless With $130 Billion Vodafone Deal (http://www.macrumors.com/2013/09/02/verizon-communications-gains-full-ownership-of-verizon-wireless-with-130-billion-vodafone-deal/)



Xgm541
Sep 2, 2013, 01:29 PM
Being a Verizon Communications customer for years and years, I can say I've only had good experiences.

I used their ADSL service for a long time in NYC and have switched to their FiOS service. I get about 10% above advertised speeds at all times.

I know many have had horrible experiences in the past but hopefully some of the positive business practices i've seen will follow over.

macnisse
Sep 2, 2013, 01:30 PM
"Value across platforms" sounds promising

dampfnudel
Sep 2, 2013, 01:35 PM
"The deal between the two companies is expected to close during the first quarter of 2014 and should have little impact on Verizon and Vodafone customers."

Well, as far as Verizon customers are concerned, no beneficial impacts like cheaper, more competitive plans. T-Mobile, here I come.

Shaun, UK
Sep 2, 2013, 01:41 PM
Following the sell to Verizon, Vodafone plans on a £6 billion investment plan nicknamed "Project Spring", which will speed up the introduction of 4G networks in the United Kingdom, which up till now has been a relatively slow process, as well as increase investment in installing fibre optic cables, providing faster broadband services to customers. The plan will also strengthen Vodafone's retail presence in the United Kingdom and develop mobile payment services, which are currently not offered on the carrier.

Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.

Carlanga
Sep 2, 2013, 01:42 PM
So basically moving money prob in a cheaper and legal way so that vodafone can expand the 4G network over @ UK.

cuestakid
Sep 2, 2013, 02:18 PM
Doesn't the FCC and SEC have to approve this deal?

jfx94
Sep 2, 2013, 02:42 PM
"seamless and integrated products and solutions for our customers" - this is not currently the phrase I think of when I consider Verizon. But maybe that will change. Hopefully.

tdtran1025
Sep 2, 2013, 02:48 PM
Anticompetetive practice of monpoly

Chupa Chupa
Sep 2, 2013, 02:51 PM
Doesn't the FCC and SEC have to approve this deal?

Yes, FCC has to approve as a technicality but it's an automatic approval, i.e., "pro forma" because VZ already owns controlling shares of VZW.

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Anticompetetive practice of monpoly

Nope, not even close.

cameronjpu
Sep 2, 2013, 02:57 PM
Doesn't the FCC and SEC have to approve this deal?

Approval should not be an issue as it will not add or subtract a player from the market, just change the ownership of that player.

Sheza
Sep 2, 2013, 03:13 PM
Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.
I don't see the logic in mobile carriers doing fixed broadband since there are already some great deals out there, it's pointlessly crowding the market when they could be investing more money in mobile coverage and speed upgrades.

I don't see the logic in cutting fixed broadband though. Until recently there was no 4G coverage in my area and even then it's nothing compared to the speeds I can obtain using fibre.

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Anticompetetive practice of monpoly
It's not, Vodafone didn't have a controlling stake in it, and Vodafone do not operate in the US market, meaning there is no loss or gain of competition in the market.

People are reading this wrongly.

acearchie
Sep 2, 2013, 03:13 PM
Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.

Well my flat is the other option. We have no landline and no line rental.

My broadband supplier installed an ethernet cable right into the wall and I have 100Meg UP/DOWN all for the same price as 8meg on AOL!

Sheza
Sep 2, 2013, 03:15 PM
Well my flat is the other option. We have no landline and no line rental.

My broadband supplier installed an ethernet cable right into the wall and I have 100Meg UP/DOWN all for the same price as 8meg on AOL!
I think perhaps the US has it slightly different to us in the UK.

dazed
Sep 2, 2013, 03:17 PM
Now they just need to come to Canada and buy Wind or someone similar and then take on the big 3 telcos here.

old-wiz
Sep 2, 2013, 03:36 PM
Verizon will now need to raise wireless plan charges in order to pay for the purchase. Wonder if there will be a new surcharge "investment recovery fee" to help pay for it? This full ownership can't possibly help customers.

Westside guy
Sep 2, 2013, 04:34 PM
Well, as far as Verizon customers are concerned, no beneficial impacts like cheaper, more competitive plans. T-Mobile, here I come.

I was a Verizon customer for several years. Their network's coverage of the US seems to be the best, by far - especially in rural areas. But their prices are high, and their business practices stink.

All of our phones are now on T-Mobile. When I bought an iPad Mini, though, I bought the Verizon model. 99% of the time it's simply tethered to my iPhone or on wifi - I don't maintain a Verizon account. But when I needed network connectivity in a rural part of the US, having that $20 Verizon option available was great! I think it's the best use of Verizon's network - as an emergency fallback.:p

fullauto
Sep 2, 2013, 04:38 PM
So basically moving money prob in a cheaper and legal way so that vodafone can expand the 4G network over @ UK.

AND Australia. God knows Vodafone needs all the help they can get down under. I still experience frequent dropouts.

addictive
Sep 2, 2013, 05:42 PM
Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.

They want to be able to offer you access to the internet/broadband not necessarily voice on landline. There is going to be a round of acquisitions in European telecoms and the next move is about being able to offer the customer triple play options all in one bill: Mobile, TV, Broadband.

bigpics
Sep 2, 2013, 05:49 PM
All of our phones are now on T-Mobile. When I bought an iPad Mini, though, I bought the Verizon model. 99% of the time it's simply tethered to my iPhone or on wifi - I don't maintain a Verizon account. But when I needed network connectivity in a rural part of the US, having that $20 Verizon option available was great! I think it's the best use of Verizon's network - as an emergency fallback.:p

Huh. Something to look into - maybe with one of the companies that sells Sprint access on the cheap for phones.

Thanks!

Meanwhile, since Verizon's old line business is horse and buggy they're fortunate to be able to fully own the growing part before the parent got too stale. The VM "subsidary" is going to be in the driver's seat here Real Soon Now.

dampfnudel
Sep 2, 2013, 05:56 PM
I think perhaps the US has it slightly different to us in the UK.

You got that right.

jayducharme
Sep 2, 2013, 05:58 PM
None of the major telecoms seem to be much different. All of the pricing structures are similar. It reminds me of the "choice" the public is given with television services. Where I live, each community has exactly one cable provider. You either go with that one or you get a dish (or for the adventurous, an antenna). But those are the only choices. And it's the same for cell service. In my area, different telecoms seem to have advantages in different sections of the city. If you live in a Verizon-strong area, that's about your only choice if you want to use your cell phone as your primary number. Real choice is an illusion unless there's a level playing field from which to choose.

dampfnudel
Sep 2, 2013, 06:02 PM
Verizon will now need to raise wireless plan charges in order to pay for the purchase. Wonder if there will be a new surcharge "investment recovery fee" to help pay for it? This full ownership can't possibly help customers.

Time for Verizon customers to jump to T-Mobile or Sprint. Maybe if they lose enough people, they'll change their greedy ways (AT&T included).

Khaaaaaaaaaan
Sep 2, 2013, 06:21 PM
...what's it like to have $130 billion in cash & stock laying around waiting to be used? :confused:

darster
Sep 2, 2013, 06:29 PM
Nothing good will come of this for US consumers.

yeah
Sep 2, 2013, 06:44 PM
...what's it like to have $130 billion in cash & stock laying around waiting to be used? :confused:

Imagine owning 200,000,000 16 GB iPhone 5's. :D

alent1234
Sep 2, 2013, 07:22 PM
Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.

i'll take unlimited fixed broadband at $50 a month and a small amount of mobile broadband at a cheap price any day over mostly mobile broadband.

i'll use maybe 1.5GB on both my smartphones in a month compared to 200GB on my home internet connection. the nature of wireless tech means it will always be slower and more expensive than home wired internet access

alexforget82
Sep 2, 2013, 08:47 PM
"Verizon Communications Inc. has no interest in expanding to Canada, says the company's CEO Lowell McAdam, ending months of speculation that the U.S. telecom giant was poised to shake up Canada's wireless market."

http://m.theglobeandmail.com/report-on-business/verizon-ceo-now-has-no-interest-in-canadian-entry-report/article14071479/?service=mobile

dampfnudel
Sep 2, 2013, 09:42 PM
"Verizon Communications Inc. has no interest in expanding to Canada, says the company's CEO Lowell McAdam, ending months of speculation that the U.S. telecom giant was poised to shake up Canada's wireless market."

http://m.theglobeandmail.com/report-on-business/verizon-ceo-now-has-no-interest-in-canadian-entry-report/article14071479/?service=mobile

They're too busy shaking up our pockets here in the US.:D

Plutonius
Sep 2, 2013, 10:12 PM
Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.

They are going to get their money one way or another. If people switch from fixed line to mobile broadband, expect the price of mobile broadband to go up.

puckhead193
Sep 2, 2013, 10:57 PM
I wonder what his means for my vz stock in anything?

acearchie
Sep 3, 2013, 04:26 AM
I think perhaps the US has it slightly different to us in the UK.

I'm not quite sure if you are suggesting I don't live in the UK?

I have this service in London...

everything-i
Sep 3, 2013, 05:33 AM
Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.

There is no where near the available spectrum to provide the bandwidth required to replace fixed line broadband en mass. It would be nice for everything to go wireless but its just not possible.

Rocketman
Sep 3, 2013, 05:58 AM
That is not the whole story. Vodafone is issuing a dividend to return 71% of the proceeds to shareholders. They are only using about $5B to expand LTE service inside UK.

Verizon is issuing $61B in bonds at 5% interest to raise the cash to do the deal now and capture the revenue stream to clear the debt. Just the fee to place the bonds is $1.2B and this is split among 5 banks and one single guy (Paul J. Taubman). The one guy is getting an 8 figure payday! ($20-80m). My guess is the government will capture fully half of that!

Financing and Approvals

The transaction consideration of $130 billion consists of a combination of cash, Verizon common stock and other items.

Verizon will pay Vodafone $58.9 billion in cash. To fund this portion of the consideration, Verizon has entered into a fully executed $61.0 billion Bridge Credit Agreement with J.P. Morgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Bank of America, N.A. and Barclays. Verizon intends to reduce the commitments under the Bridge Credit Agreement with the issuance of permanent financing. In addition, Verizon expects to maintain capital structure, balance sheet and financial policies consistent with investment-grade credit metrics, in part based on 100 percent access to Verizon Wireless’ cash flow.

Verizon will also issue common stock currently valued at approximately $60.2 billion to be distributed to Vodafone shareholders, subject to a collar arrangement with a floor price of $47.00 and a cap price of $51.00 that will determine the maximum and minimum number of shares to be issued upon closing of the transaction. In addition, Verizon will issue $5.0 billion in notes payable to Vodafone, and Verizon will sell its 23.1 percent minority stake in Vodafone Omnitel N.V. to Vodafone for $3.5 billion. The remaining $2.5 billion of the transaction value will be a combination of other consideration.The 364-day billion bridge loan will be refinanced with a permanent capital structure consisting of $49 billion of corporate bonds and $14 billion of loans, sources told Thomson Reuters. The loans will include a $2 billion revolving credit and $12 billion of term loans.$130B, to compare scale, is almost as much cash as Apple has, the largest cash hoard (retained earnings) in the entire world.

One might remember Apple issued bonds to finance its domestic expansion plans since it cannot repatriate cash from outside the USA without a substantial double tax penalty.

Rocketman

the8thark
Sep 3, 2013, 06:54 AM
AND Australia. God knows Vodafone needs all the help they can get down under. I still experience frequent dropouts.
I understand your feeling. Very few internationals care for Australia. But when the **** hits the fan they surely want the Australian experts to fix up the mess.

asthamapheo
Sep 3, 2013, 08:43 AM
$130 billion?:eek: that's huge! by my calculattions, it means that VZ has a value of $288-290 billion. mind-blown!

guzhogi
Sep 3, 2013, 01:35 PM
Wish I had $130 billion to spend on a few companies… :rolleyes:

fatboyslick
Sep 5, 2013, 09:20 AM
Seems like most of the UK mobile carriers are getting into fixed line broadband now. I don't see the logic myself. More and more people are ditching their fixed line connections because they don't want to pay the extortionate line rental charges when they probably use their mobile 95% of the time anyway. Surely the future is mobile broadband extended into the home. No wires, no phone line needed, no hassle. They should be spending that money on significantly increasing their bandwidth capacity to allow more and more data services.


What powers the mobile networks?

Ground-laid fibre cables

That's why networks are buying up fixed line companies, so they can cost save at one end and then at the other offer customers bundled services.

Most companies still demand a fixed network for broadband and call centres so it makes sense to offer a bundled package that undercuts BT who by far dominate the fixed market.

Vodafone bought Cable and Wireless for this very reason, who have the world's largest fixed network.