Does Selling Verizon Wireless Make Vodafone a Target for AT&T?

It may be Labor Day long weekend in the US but the senior management of Verizon and Vodafone have potentially come to an agreement over Vodafone selling back its 45% share of Verizon Wireless to Verizon Communications. Clearly Vodafone’s investors will come out smiling at the agreed sale price of US$ 130 billion.  


It is still a bit curious. Why would Vodafone sell its share of an operator that runs one of the most successful mobile telco businesses in a lucrative and innovative market such as the US? It was almost an open secret that relations between the management of Verizon Communications and Vodafone Group had soured substantially over the intervening 14 years. It is a bit of a shame. At the beginning, the pre-cursors of Verizon (Bell Atlantic/GTE) welcomed the investment but also wanted to leverage the mobility and 3G experience and expertise Vodafone had built in the European and global markets.


Clearly the Verizon Communications management have made an offer Vodafone’s senior management could not refuse.


So what happens now? Vodafone is hardly doing a ‘Carnegie’, selling off the family business and live off the proceeds. It is telling that Vodafone is intent on seeking our potential acquisitions and will focus on “quad play” opportunities. It was not long ago that Vodafone acquired Kabel Deutschland. Expect to see more acquisitions in a similar vein.


The mobile market is frothy with acquisition talk. Rumors are starting to circulate that AT&T may be ‘interested in what is left of Vodafone’. It is a possibility that AT&T does marshal the bankers, the bonds and the cash to purchase Vodafone. We suspect that might be underestimating Vodafone. It is not a case of Vodafone selling the family silver to keep afloat.