Vodafone in talks to sell stake in Verizon Wireless

atush

planteria wrote: »

there is strong speculation that at least some of the windfall will be returned to shareholders:)

While I agree selling the cash cow may not be best for long term divided seekers, I bought this so long ago and for so little that I am sitting on a fat profit plus gained good divends. I would not cry if I sold after I got my share of the proceeds. There are other income shares on my list to buy.

Reaper

Yes it is looking more likely now. Previously Verizon said they would not pay more than $100 billion but now they have upped that to $130 billion which is a sizeable increase.

A shareholder windfall looks likely, though I would temper that with the expectation of a big drop in the value of the shares once it has been paid. After that they will have lost a great income stream plus it is a virtual certainty they will use the remaining money to go on an ill advised, over priced, empire building spending spree that destroys shareholder value. I expect a lot of people to sell as soon as any windfall is paid.

serko

If Vodafone loses Verizon stake what does it have left?


Some people say that Vodafone’s stake in Verizon is the jewel in the crown. Indeed analysts at Bank of America Merrill Lynch value Vodafone’s non-US assets at £46 billion which is a small sum compared to the estimated value of £84 billion. Should the sale of Vodafone’s Verizon stake therefore go ahead let’s have what remaining operating assets will Vodafone have.
European operations
Vodafone’s European Central and Northern European operations are the company’s biggest unit with revenue of £18.8 billion however in the last financial year there was no growth in this market. Their Southern European operations had a shocking performance with a revenue decline of 11.6% to £9.6 billion. With high competition and poor economies in the European market it is difficult to see an upturn in this market in the foreseeable future. In fact the only 2 European countries that saw revenue growth last year were Turkey with 17.3% and Germany with a meagre 0.2%. The company is seeking to diversify its offering in the European market via acquisitions such as the recent Cable and Wireless takeover and the pending Kabel Deutschland takeover. However it is yet to prove that this will provide material growth in these mature markets.
ROW Operations
The rest of the world operations make up 30% of total group turnover and it is an area that is seeing a slight growth in turnover of 3.9%. However that is hardly the kind of performance that will inspire confidence.
India is one of the biggest contributors within this division however there are some big question marks hanging over their Indian division. There are persistent tax charges which the government is trying to impose on them. The Indian government is also often changing rules and charges with regards to spectrum licenses. This makes it very difficult to do business there. On top of that the Indian economic growth is slowing drastically and that could have an impact on Vodafone’s performance in the country. Last year profit from the Indian division was a mere £221 million.
The other big contributor in the rest of the world is Vodacom which is the holding company for Vodafone’s African assets. African economies are some of the best performing economies in the world at the moment. On the other hand these economies are heavily reliant on natural resources so are very exposed to the global economy. Revenue only grew by 3% at Vodacom but profits grew at a faster rate of 10.3% to just over £1.2 billion.
Total remaining group
I have to say Merrill Lynch’s valuation of £46 billion seems slightly on the low side. The remaining Vodafone units would have an operating profit of around £5.5 billion and even though there are not many high growth markets I would still value this at 10 times earnings so would realistically see a value of £55 billion.
What is clear I that the Verizon stake seems to be far more valuable than the rest of the group combined and should the indeed sell their stake it will be very interesting to see what Vodafone does with the money. Of course that is if Vodafone has a say about it. There are rumours that Vodafone without Verizon could be a takeover candidate for an American operator such as AT&T. It is certainly an interesting time for holders of Vodafone.

valueshare.co.uk

sabretoothtigger

Beginning to wish I had taken VOD at 110 or even 130 Thankfully this helps my FTSE tracker, reinforcing my belief FTSE is a hold generally

Selling USA is good idea as they are not the determiner of its success . Wireless is great for countries that could never afford wired phones to begin with, concentrate there where benefit is highest

planteria

Reaper wrote: »

...go on an ill advised, over priced, empire building spending spree that destroys shareholder value.

. trying to build in to France, and strengthening in existing markets by moving into fixed-line, both seem to be on the agenda. i'm not sure what i think....and what they'll do with proceeds is The question.

Masomnia

Nearly bought vod in the 150s on the strength of the dividend. Thought it was a case of the div being too high rather than price too low and expected the div to be cut because of that.

Oh well.

sabretoothtigger

Growth is what makes profit, anyone can buy up a business make yourself big. France is the last place for growth thanks to all their arcane laws. Germany has a declining population and so on. Go East

Buzby

If there is a large dividend, the big laugh is you can bet small shareholders will have all taxes creamed off before they even get a sniff of the Verizon dividend - whilst, as we all know, Vodafone will not be paying a cent in tax as a result of he windfall.

I'd like to be treated in the same way, thanks.

sabretoothtigger

Companies can drag losses from 6 years ago to levy against profit now. Thats a large part of how they dont pay, we cant do that

Vodafone gets $65bn in Verizon Comms shares in $130bn deal & will pass all shares plus some cash to Voda shareholders

http://t.co/VssOQdJkmE [so no tax on shares gained I think]

congrats to the victors

lvader

Shareholders are getting some of the cash and $60bn in Verizon shares.