Vodafone shares jump on report of Verizon desire to resolve JV status

A report that Vodafone and Verizon Communications have held talks about a possible merger or Verizon buying Vodafone's 45 per cent stake in their Verizon Wireless joint venture sent Vodafone's shares to up nearly 5 per cent in London, according to Reuters. The Bloomberg report, which cited unnamed sources familiar with the matter, said that the companies have not formally progressed to any serious talks about either option.

The report said range of options are said to be under consideration with an aim of finding a solution by year-end. Talks late last year focused on a full merger came to nothing after failing to find a compromise over leadership and a headquarters location. The breakdown of these talks make a buyout or partial sale of Vodafone's 45 per cent stake a likelier outcome, the report.

Verizon and Vodafone declined to comment, according to Bloomberg.

Verizon executives have said they are not contemplating changing the carrier's relationship with Vodafone right now, though they have consistently expressed a desire to gain full control over Verizon Wireless.

"Well, I don't think our appetite in the last 12 years has changed. I think we have always said we would love to own their 45 per cent," Verizon Communications CFO Fran Shammo said Monday during an investor conference. "I don't think that changes, but at this point there is really nothing new to report."

"Verizon wants to control what is genuinely the best telecom asset on the planet," New Street Research analyst Jonathan Chaplin told Bloomberg. "Verizon Wireless just came off a phenomenal year where they captured all the growth in the industry with record high margins. And this year I would expect the same."

While these rumours of the joint venture coming to an end are not new, the most recent discussions focused on a merged company being based in the UK, which would have been attractive for tax reasons. Under that arrangement Verizon Communications CEO Lowell McAdam heading the operation, sources told Bloomberg. Under this proposal, Verizon shareholders would have held 55 per cent to 60 per cent of the merged company's equity. Verizon would need to pay well over $100 billion to acquire Vodafone's stake in Verizon Wireless, according to BTIG analyst Walt Piecyk.

For more:
- see this Bloomberg article
- see this Reuters article

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