As expected, Verizon Communications (NYSE:VZ) and Vodafone shareholders approved an agreement for Verizon to buy Vodafone's 45 percent stake in Verizon Wireless for $130 billion. With the deal sailing toward a closing date next month, attention is now turning to what Verizon plans to do with full control of its lucrative wireless asset and what might change.
As the Wall Street Journal noted, the deal will return a windfall $84 billion, or 71 percent of net proceeds, to Vodafone shareholders, with more than two-thirds of that coming in stock. The deal is the largest single return in corporate history.
The deal is made up of $58.9 billion in cash and $60.2 billion in Verizon stock. In September, Verizon blew past records by selling $49 billion in corporate debt in order to finance the deal. The deal is expected to be completed on Feb. 21, and investors are expected to receive their shares on Feb. 24 and cash on March 4.
The deal was backed by 99.8 percent of Vodafone's shareholders, and Verizon said in a separate statement that "a substantial majority" of its shareholders approved the company's issuance of up to 1.28 billion shares of common stock to Vodafone shareholders.
Now that the deal is all but complete, the wireless and telecommunications worlds are wondering what Verizon will do with Verizon Wireless, which had total wireless revenues of $21.1 billion in the fourth quarter alone, up 5.7 percent year-over-year. The main speculation is that Verizon will expand its video offerings and find more ways to bring its FiOS video content to subscribers via its mobile network.
During the company's fourth-quarter earnings conference call, Verizon Communications CFO Fran Shammo said that "full ownership will also provide access to all the cash flows and give us greater flexibility to develop converged solutions without any integration and due diligence risks."
Shammo did not reveal much more than that but did say this regarding how Verizon might combine its wireless and wireline assets, according to a Seeking Alpha transcript: "I think we're very satisfied with the asset portfolio we have and with the acquisition of Verizon Wireless and only 100 percent of that asset you're going to see us do more things around converged [solutions]. So the wireline assets in my view will actually become more valuable over the longer term here with our footprint."
- see this Verizon release
- see this WSJ article (sub. req.)
- see this Reuters article
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Verizon to buy Vodafone's 45% stake in Verizon Wireless for $130B