Report: Vodafone would accept rating hit as price of M&A

Vodafone said it would be willing to accept a lower debt rating if a good merger or acquisition opportunity arose--a statement that analysts said signals the operator is under no pressure to sell its 45 per cent stake in Verizon Wireless.

This backs up previous comments made by CEO Vittorio Colao, who stated last month that Vodafone did not need to sell its stake in its U.S. joint venture to fund any investments in Europe, despite falling revenues in the region.

According to Bloomberg, which cited a summary of comments made in a meeting, Vodafone CFO Andy Halford said the company would take a BBB+ rating should an opportunity to make an acquisition arise. This rating is the third-lowest investment grade and one step below the company's A- ranking by Standar & Poor's.

Robin Bienenstock, an analyst at Sanford C. Bernstein, said the amount of debt required to move to a BBB+ rating may be £7 billion (€8.16 billion) or more and could finance a bid for Kabel Deutschland. Vodafone is reportedly interested in buying the German fixed-line operator to ramp up its efforts to combine offers of voice, Internet and mobile services across Europe.

Citing comments made last month by unnamed sources familiar with the matter, Bloomberg said the operator put its plans to approach Kabel Deutschland on hold after leaks of a potential offer. Kabel Deutschland is valued by the market at €6.2 billion.

For more:
- see this Bloomberg article

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