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
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
Verizon and AT&T will sell Apple’s latest tablet on their next-generation 4G wireless networks, after Apple unveils the third version of its iPad tablet in the first week of March, reports the WSJ. Suppliers in Asia are also helping Apple test a tablet with a smaller screen than the current iPad. The move would challenge Samsung’s and Amazon’s smaller tablets although Apple could decide not to proceed with the product, the WSJ adds. The rise in Apple stock beyond $500 on Monday meanwhile shows how important the company’s earnings have become, the FT reports. Were Apple’s results stripped out, Barclays Capital estimates earnings growth at S&P 500 companies that have reported fourth-quarter results would be 2.9 per cent rather than 7 per cent.
DuPont’s profits declined slightly. WSJ.
Johnson & Johnson slumps on net charges. WSJ. Read more
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.
Striking workers at Verizon Communications pushed up new US jobless claims last week, reports Reuters, but there was little evidence the recent stock market turmoil had spooked businesses enough for them to cut workers. Initial claims for state unemployment benefits rose 5,000 to 417,000, the Labor Department said on Thursday. While the level suggests the job market is still struggling to gain momentum, it falls well short of a recession signal. The FT says last week, at least 8,500 Verizon workers filed for insurance, and another 12,500 filed claims during the week ending August 13, which was the survey period for the government’s August employment reading, due out September 2. This suggests that the labour dispute may affect the closely watched report. The strikers went back to work on Tuesday but the strike “could start affecting non-farm payrolls this month”, said Robbert Van Batenburg, head of Global Research at Louis Capital Markets. “It’s a temporary effect, but still this doesn’t look good for the jobs market.”
Almost half the workers in Verizon Communications’ wireline telecommunications business went on strike on Sunday as negotiations for a new labor contract failed, Reuters reports. The strike, involving 45,000 workers, is the first walk-out that Verizon, one of the two big U.S. telephone network operators, has faced since 2000, when about 80,000 workers went on strike for about three weeks. The WSJ says the move was a surprise and a quick resolution appeared unlikely as the two sides remained far apart.
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.
The price action in Deutsche Telekom on Monday morning: Read more
Verizon Communications, the US telecoms group, plans to acquire Terremark Worldwide, a leading US cloud services and IT company, through a cash tender offer at $19 per share or $1.4bn, reports the FT. The offer price represents a 35% premium over Terremark closing share price on Thursday. The tender offer for the deal, which Verizon hopes to close in the current quarter, marks the company’s big push into the booming market for corporate IT services delivered online rather than by an in-house IT department. Goldman Sachs and Weil, Gotshal & Manges represented Verizon in the deal, while Terremark worked with Credit Suisse Securities and Greenberg Traurig. DealBook quotes an analyst saying for Verizon, $1.4bn ‘is a drop in the bucket’ and ‘provides a lot of strategic value’.
Verizon Wireless, the largest US mobile network operator, will begin selling a version of Apple’s popular iPhone smartphone next month, marking the end of an exclusive US agreement between Apple and AT&T that began when the original iPhone was launched in June 2007, the FT says. Meanwhile, the New York Times’ DealBook asks if the Verizon addition will bolster Apple’s acceptance in banking and other enterprise areas?
‘It is imperative that we find ways to protect the future openness of the Internet and encourage the rapid deployment of broadband,’ Google and Verizon said on Monday, launching a joint proposal on regulating internet traffic. A proposal that has attracted the ire of interest groups which see an attack on net neutrality, the FT reports, after the firms proposed creating ‘differentiated online services’ that could involve higher charging.
The FCC has given the Google-Verizon proposal a frosty reception, TechCrunch says, emphasising that it will decide the issue. Just as well — plenty of loopholes exist in the proposals which would seriously affect the future of business on the internet, reports Ars Technica.
Google and Verizon walked into a barrage of opposition from public interest groups in Washington on Monday as they formally announced a joint proposal for how traffic on the internet should be regulated, reports the FT. The biggest US internet and telecommunications groups said their plan, the first reports of which emerged last week, would ensure all services on the internet were treated equally – “net neutrality” – and the web would remain a fully open medium. Engadget notes that it’s still up to the Federal Communications Commission to implement Google and Verizon’s suggestions.
Google and Verizon have agreed the outline of a plan covering key aspects of how internet services are carried over communications networks, establishing what could become a financial and operational blueprint for the next phase of the web’s development, reports the FT. The arrangement would put some restrictions on the US carrier’s ability to block or degrade specific internet services, but still leave it free to charge more to give some services priority on its network.
Verizon Communications has raised the possibility that Verizon Wireless, the leading US mobile phone operator, could start paying a dividend to Vodafone in 2012, reports the FT. Analysts said it was the first time that Verizon Communications, the US telecoms group with a controlling stake in Verizon Wireless, had spelt out a potential date for the restoration of dividend payments.
Apple’s dominance in tablet computers faces a joint Google-Verizon attack, the WSJ reports. The rush to build an iPad killer marks another stage in a growing alliance between Verizon and Google, the Journal adds.
Nokia has meanwhile named a new executive to lead its smartphone unit, Bloomberg reports. The company is still looking to claw back markets taken by Apple’s iPhone, especially after disappointing first-quarter earnings.
CenturyLink and Qwest on Thursday revitalised consolidation in the telecoms sector by agreeing to merge their businesses in an all-stock deal which values Qwest at $22.4bn, including debt, the FT reported. The deal will create the third-largest fixed-line carrier in the US after AT&T and Verizon – the two integrated telecoms companies focusing on their wireless services for growth. Combining CenturyLink and Qwest’s local and regional telecoms businesses is expected to result in synergies of about $625m a year, after three to five years.
Vodafone will receive no dividend from its stake in Verizon Wireless until 2012 at the earliest after the US wireless carrier’s $28bn acquisition of rival Alltel but the deal will “significantly increase” the investment’s value, the UK group said. Just three months ago, Vodafone said it expected dividends by the end of 2009, four years after it last received a £923m payment from Verizon Wireless. The absence of cash returns from the 45% stake has riled some investors. But Arun Sarin, outgoing chief executive, said Vodafone’s Alltel acquisition would “clearly enhance” the value of its holding, estimated at $60bn-$70bn. TPG and the private equity arm of Goldman Sachs, which beat Verizon Wireless in last year’s auction, will earn $1.3bn on investments they made just seven months ago in Alltel. The deal is a good one, says Lex, “but it was not supposed to be this way”.
Marvellous, innit, how this:
“There is no deal at this time. It is premature.” Read more
The latest on Thursday,
- France Telecom confirms $41.9bn cash-and-stock bid for TeliaSonera – Reuters, press release Read more
Britain’s Vodafone is unlikely to receive dividends on its 45 per cent stake in Verizon Wireless, the second-largest US mobile operator, until 2010 or later, based on an FT analysis of the joint venture’s debt and potential spending plans. Vodafone’s last dividend from Verizon Wireless, worth £923m, was in 2005 but Vodafone executives expect payments to resume by 2009. The likely slippage to 2010 or later could fuel tension between Verizon Communications, the US telecoms company that controls Verizon Wireless through its 55 per cent stake, and Vodafone, although both maintain they have a productive partnership.
Vodafone has had its hopes dashed of securing a swift resolution to its dispute with the UK authorities over a potential £2.5bn tax bill. A London tribunal on Wednesday turned down Vodafone’s attempt to halt an inquiry by HM Revenue & Customs into the tax treatment of its Luxembourg subsidiary. Separately, the FT reports that Vodafone announced it will not exercise a right to sell part of its minority stake in Verizon Wireless, a leading US mobile operator, because it was in the best interest of shareholders to hold onto its 45 per cent stake, which is worth an estimated $54bn.
Vodafone, as expected, on Wednesday opted for the status quo, saying that it would not exercise its right to sell part of its stake in Verizon Wireless.
The put option, the existence of which became widely known last month and prompted a wholesale look at Vodafone’s US strategy, gave Vodafone the choice of selling Verizon shares worth up to $10bn. It was the final year that Vodafone had such a right to sell part of its holding, and the option was set to expire on Thursday. Read more
Vodafone is to retain its stake in Verizon Wireless after opting not to exercise an entitlement to sell its $54bn stake in the US joint venture, reports The Times. The UK mobile group has until Thursday to exercise a “put” option entitling it to sell up to $10bn of shares in the venture to Verizon Communications, its US partner, but it is understood that, after a review, it has opted to keep its 45 per cent stake. An announcement from Vodafone on its decision is expected this week. On Sunday night the group insisted that no formal decision had been made.
Verizon Wireless, a joint venture between Verizon Communications, the second-largest US mobile carrier, and Britain’s Vodafone, is to acquire Rural Cellular in a deal valued at $2.67bn that will expand its US wireless service coverage in rural markets and add about 700,000 subscribers. Ivan Seidenberg, Verizon’s chief executive, announced the deal Monday as the company unveiled strong Q2 earnings fuelled by Verizon Wireless, which added 1.3m net new subscribers in the quarter. He said the acquisition had been “enthusiastically supported” by Vodafone, which has until August 9 to decide whether to exercise a “put” option entitling it to sell Verizon Wireless shares worth up to $10bn to Verizon Communications.
Vodafone’s board has comfortably defeated rebel shareholder Efficient Capital Structures, which was urging the UK telecoms group to spin off its 45 per cent stake in Verizon Wireless, the US mobile operator. At Vodafone’s annual meeting in London on Tuesday, investors holding more than 93 per cent of the group’s shares rejected a resolution to spin off Verizon Wireless tabled by ECS. However, Vodafone suffered some discomfort as investors holding 12 per cent of shares opposed the group’s remuneration policy, or abstained.
Vodafone’s board is expected to meet Monday to discuss the future of its 45 per cent stake in Verizon Wireless, a leading US mobile operator, ahead of Vodafone’s annual meeting on Tuesday. Efficient Capital Structures, a rebel Vodafone shareholder, has urged investors to support a resolution calling for the 45 per cent stake to be spun off. Vodafone’s board has rejected the resolution, and management is confident of support from a majority of investors. But the board must also decide by August 9 whether to exercise a put option entitling the UK group to sell up to $10bn of shares in Verizon Wireless to its parent, Verizon Communications.