Verizon Wireless buyout drive is all about the dollar signs

U.S. mobile users aren't likely to see a difference if Verizon buys Vodafone's share of its mobile business

The price Verizon might pay to buy out its mobile subsidiary, reportedly US$100 billion or more, is the most important thing that mobile users need to know about the potential deal.

Vodafone Group, which owns 45 percent of Verizon Wireless, confirmed on Thursday that it is in talks with Verizon Communications to sell its minority stake to the U.S. parent company. Vodafone cautioned that there's no guarantee they'll be able to make a deal, but the companies have talked about it before and may be more motivated than ever. Verizon declined to comment.

If Verizon does take the leap, it's likely to be the biggest telecommunications deal in U.S. history. But consumers shouldn't look for big changes in mobile phones or services from Verizon after its wireless partner is sent packing, industry analysts said. If anything, they might just take it as one more sign that they're well-loved.

"It just shows you how attractive this market is," said analyst Roger Entner of Recon Analytics. The Verizon Wireless deal would come on top of several other transactions in the billions just over the past year: Japan's SoftBank bought control of Sprint for $21.6 billion, T-Mobile paid $1.5 billion plus stock for MetroPCS, and AT&T agreed to buy Leap Wireless at a total cost of nearly $1.2 billion.

"Everybody, from the big to the small, is betting on this market," Entner said.

That's because U.S. consumers are buying into mobile technology and services in a big way and looking to combine the wireless experience with wireline TV and broadband, he said.

"Americans are seeing the value of it," Entner said. "We are leading the wireless broadband, and smartphone, and integrated communications world."

Verizon just wants to put more money behind a good investment, Entner said. The deal might be coming together now partly because interest rates are expected to rise, increasing Verizon's potential cost of borrowing to finance the buyout.

Taking full control of Verizon Wireless would also simplify the company's management, eliminating the separate board of directors overseeing the mobile subsidiary and some redundant administrative functions. Bringing its wired and wireless businesses fully into one company might make it a bit easier for Verizon to offer combined services, he added.

"For the subscribers, I don't think much will change," Entner said. A wholly owned Verizon mobile business wouldn't be significantly more competitive, either. Nor would Verizon's debt load, reportedly $50 million or more, weaken the company. In time, the buyout would pay for itself, Entner said.

"At roughly $2,000 per subscriber, it's not even outlandishly expensive," he said. Cingular paid more per subscriber to acquire AT&T Wireless in 2004, according to Entner.

"For U.S. consumers, there won't be any noticeable difference," said Chetan Sharma, founder and president of Chetan Sharma Consulting.

Where a Verizon-Vodafone deal could have repercussions is in Europe, because Vodafone might use the proceeds to acquire weaker mobile operators there, Sharma said.

For Vodafone, a U.K.-based company that's involved in mobile businesses on six continents, Verizon's interest in buying now may be a lifeline.

"Vodafone's core markets are in trouble as net revenue is declining," Sharma wrote in an e-mail interview. "It needs cash to shore up the assets in Western Europe."

The company is also starting to focus on combined wired and wireless plays, such as its planned $10 billion acquisition of Kabel Deutschland, Germany's biggest cable operator. The company aims to combine fixed broadband, mobile and TV on one bill, Enter said.

"What is finally motivating Vodafone is the implementation of their European integrated carrier strategy," he said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuestelecommunicationCarriersVodafone GroupmobileVerizon CommunicationsMergers and acquisitionsVerizon Wirelessbroadband

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Stephen Lawson

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?