Vodafone Group Plc. has been able to narrow down market value gap with Verizon Communications Inc. as investors feel that a merger or an agreement over the US wireless venture is set to happen. Since 5th March, Vodafone shares have increased 11% as a report came out stating that Verizon is working to resolve the relationship with Vodafone by end of 2013. Incidentally, numerous options are being discussed and once of those are 100% stake holding of the Verizon Wireless venture by Verizon Communications. Incidentally, if Verizon is able to ensure full ownership over the most profitable division of theirs, it will help the company on the longer term. Vodafone currently have around 45% stake in the venture and selling all of it is expected to fetch the company a whopping $115 billion. Verizon Wireless venture, incidentally, is the largest US wireless service provider at this point of time.
The Director of European Telecommunications Department of Bank of America Merrill Lynch, Emmet Kelly stated that all the US paths currently lead to value for the Vodafone shareholders. The most obvious scenario, at this point looks like those Vodafone shareholders will receive a premium due to the merger. Alternatively, Vodafone may also decide to sell its stake on Verizon Wireless.
Vodafone is currently the 2nd largest wireless service provider in the world, after China Mobile Ltd. Vodafone shares increased by 2% on today to 187.20 Pence per share. Thereby, the carrier has a market value of $139 billion at this point of time. On the other hand, Verizon has jumped up by 0.3% and each share costs $49.16 now, valuing the company at a whopping $141 billion.
According to the Sunday Times report, Vodafone is working toward a clean break from US and a deal with Verizon may be completed by this summer. It cited industry and banking sources, apart from investors, but, didn’t identify any of them. The report says that Vodafone can at least earn $135 billion by selling its stake on Verizon Wireless. When the spokesperson of Vodafone was asked on this, he declined to comment.
Chief Executive of Vodafone, Vittorio Colao has asked his company officials to lookout for alternate markets outside Europe, mainly because of the turbulent economic condition of this region. His main focus, at this point is Africa and Asia.