Vodafone enters post-Verizon era at half its market value

Vodafone completes the transaction on Friday Feb. 21 to sell its 45 per cent stake in Verizon Wireless for the princely sum of $130 billion (€94.8 billion), completing one of the most hotly anticipated and debated transactions in its history.

As of next week, the UK-based operator enters a new era without its former U.S. business, and will focus instead on building up its network operations in Europe and emerging markets such as India.

It will also be a little lighter: as Bloomberg pointed out, the company is cutting its market capitalisation by around half, from £116 billion (€141 billion/$193 billion) based on last month's highest share price of 240 pence, to around £60 billion.

Bloomberg data showed that Vodafone will drop from the world's second-biggest telecoms operator to the fourth when measured by market value, behind China Mobile, AT&T and Verizon Communications.

The pressure is now on to find growth elsewhere: Vodafone CEO Vittorio Colao recently said during a trip to New York that the company could have a war chest of between $30 billion and $40 billion for future mergers and acquisitions, and said areas of interest would be fixed-line assets in Europe, the global enterprise business and mobile operations in emerging markets, according to Reuters.

The company has also earmarked £7 billion for network investments as part of Project Spring, and has already announced the extension of LTE roaming to 18 markets as part of this investment.

"The next few months are going to be tough," Guy Peddy, an analyst at Macquarie Bank, told Bloomberg. "Vodafone continues to lose share and is losing share in its major markets at an accelerated rate because it is facing convergence competition from incumbents and price competition from smaller players."

Vodafone is already believed to be targeting new acquisitions in Europe, such as Ono in Spain, as well as in markets such as India, where the company recently gained approval to increase its share in its local unit to 100 per cent and bought spectrum for around $3 billion. Rumours are rife that it also plans to buy Tata Teleservices to become the largest mobile operator in the country.

Vodafone may be half its size, but speculation will continue over where it will pounce next and how it will deal with the tough market conditions in Europe.

For more:
- see this Bloomberg article

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