Wednesday, May 17, 2006

Verizon may buy Vodafone stake in Verizon Wireless

It looks as if Verizon wants complete ownership of its wireless arm, Verizon Wireless. Verizon Wireless was actually started as a joint venture between Verizon and Vodafone, a U.K.-based mobile company. According to The Observer, Verizon is offering Vodafone US$48 billion for its stake in Verizon Wireless. The total cost of the transaction to Verizon will actually be $56 billion, since the deal also includes Verizon taking on $8 billion in debt.

Verizon may be feeling some pressure from AT&T, formerly SBC, to take complete ownership of Verizon Wireless. Cingular was formed as the result of a joint venture between SBC and BellSouth. Once SBC purchased AT&T and changed its name, it then set its sights on complete ownership of Cingular. Meanwhile, AT&T took a somewhat different approach in buying BellSouth's stake in Cingular by simply striking a deal to acquire BellSouth.

Though the deal means Verizon will have to dump out a large chunk of change, it's an important step for Verizon regarding controlling its own wireless destiny. The deal has not been formally announced yet, but it's hard to imagine Vodafone would pass up the chance to receive such a large windfall. It sounds as if Vodafone has more to worry about these days than a stake in a U.S. wireless company.

Read more from The Observer.

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