Or simply giving money away?
There was much hoopla late on Wednesday as Verizon got the world’s largest corporate bond sale away — some $49bn of paper which will help to buy the rump of Verizon Wireless back from Vodafone.
Here’s a little table from Marc Ostwald of Monument Securities that hints at the excessive premium offered by Verizon, along with the instant profits on offer to investors here: Read more
Financial maze du jour — can you get tens of billions of pounds in cash through this corporate structure to a big, tax-free investor payout? Start from the bottom, find your way to the top. Read more
Today marked the rarest of events: a Vodafone statement that directly references its joint venture partner.
The last time we had a mention of Verizon Communications outside the boilerplate on a Vodafone stock market announcement was back in 2007, when Arun Sarin was bounced (by this blog) into denying the existence of Project Vulture. It seems that Verizon, like Lord Voldemort, shall not be named. Read more
Hello to the City’s new watchdog, the Financial Conduct Authority. It may seem rude to make requests on your first working day but there’s a market rumour on which we would like some clarity. It involves what would be the biggest M&A deal ever, and it’s on your patch. Read more
AT&T has taken another swipe at regulators who blocked its bid for T-Mobile’s US operations, accusing the Federal Communications Commission of “piling uncertainty” on the mobile industry as it reported results that showed the costs of the failed bid. AT&T reported a $6.7bn net loss in the fourth quarter of 2011, down from net income of $1.1bn a year earlier, in part because of the $4bn break fee from its failed T-Mobile USA bid, reports the FT. The figures showed a 50 per cent jump in smartphone sales even after it lost exclusivity over the iPhone in the US but subsidies on the high-end handsets weighed on profits in AT&T’s wireless operation, where operating margins fell from 22.9 per cent to 15.2 per cent. The WSJ reports that AT&T is trailing rival wireless provider Verizon in the race to sign up new customers: while AT&T signed up 717,000 customers to long-term contracts in the fourth quarter, its competitor added 1.2 million.
Verizon Communications has dashed the hopes of Vodafone investors by ruling out a return to a recurring dividend from the two companies’ US mobile phone joint venture, Verizon Wireless. Lowell McAdam, Verizon’s new chief executive, told the FT it was not possible to have a policy of annual dividend payments by Verizon Wireless because the leading US mobile operator may need to buy rival businesses or purchase radio spectrum. However, he sought to draw a line under long-standing tensions between the two companies, saying they were working closely together on several projects, and did not rule out the possibility of a merger.
Verizon Wireless will pay a long-awaited dividend of $10bn to its US joint venture partner, the UK’s Vodafone next January, the FT says. Verizon Communications, which owns 55 per cent of Verizon Wireless,had blocked dividend payments by the mobile operator in 2005, a move widely seen as an attempt to squeeze Vodafone out of the joint venture. Verizon Communications will receive $5.5bn and Vodafone will get $4.5bn. The move is also likely to forestall major changes to the two companies’ relationship, such as a merger or a buyout of Vodafone’s stake, the WSJ reports.
Verizon Communications has agreed that Verizon Wireless, its US mobile phone joint venture with the UK’s Vodafone, will pay a long-awaited dividend of $10bn next January, the FT reports. It will be the first dividend from Verizon Wireless since 2005, and Vodafone said that it would respond by making a special £2bn ($3bn) pay-out to its shareholders next February. The Telegraph says decision vindicates Vodafone chief executive Vittorio Colao’s determination to keep the Verizon Wireless stake, despite a policy of selling off non-controlling holdings.
AT&T has signalled its readiness to make concessions to secure regulatory approval for its $39bn bid to buy Deutsche Telekom’s US mobile phone business, reports the FT. AT&T’s cash and stock bid for T-Mobile USA is set to draw intense scrutiny from politicians and competition authorities. Randall Stephenson, AT&T’s chief executive, told the FT the US telecoms giant accepts that it is likely to have to make concessions to regulators. By buying T-Mobile USA, AT&T would pass Verizon Wireless to become the top US mobile operator, with an estimated 44% market share by revenue. The number of large mobile operators would be reduced from four to three, and analysts said regulators could insist that AT&T surrenders radio spectrum.
Vodafone’s chief executive has warned he will not be “forced” into selling the UK group’s minority stakes in four mobile phone operators, reports the FT. Vittorio Colao told the FT that the sale this month of Vodafone’s 3.2% stake in China Mobile for £4.3bn – almost double what the group paid for it – was not due to investor pressure, and urged shareholders to be patient about other possible disposals. While indicating willingness to sell all Vodafone’s minority stakes, including a 45% stake in US mobile operator Verizon Wireless, Colao said he would not be coerced into such sales. The Telegraph reported rumours this week that Vodafone is a possible buyer of UK mobile phone retailer Phones4U and broadband group TalkTalk.
Marvellous, innit, how this:
“There is no deal at this time. It is premature.”
The rebel shareholder urging Vodafone to spin off its 45 per cent stake in Verizon Wireless, a US mobile operator, on Monday night admitted it was heading for defeat in its campaign to persuade a majority of the UK group’s investors to back its stance. However, Efficient Capital Structures, the activist shareholder backed by John Mayo, former Marconi deputy chief executive, claimed it had won the argument in favour of Vodafone changing strategy on its Verizon Wireless stake. Glenn Cooper, ECS chairman, said he expected the group to retain its small stake in Vodafone in the belief it would see increased value from a new strategy.