Vodafone sells 45% stake in Verizon Wireless, the largest mobile operator in the United States, to parent company Verizon for $130 billion. Now it's official, and the bombshell of the first Monday of September has already received the consent of the markets, enthusiastic after the announcement of the operation: the Vodafone share has reached +5% on the London Stock Exchange, at 215 pounds per share. Placet which also affects Italy: in fact, the agreement provides among the various counterparts also that Verizon sells the approximately 23% of the capital it holds in Vodafone Italia (aCurrently the British multinational Vodafone holds 76,86 percent of Vodafone Italy, while the Verizon group owns 23,14 percent).
The question now, once the record amount has been collected, is to understand how Vodafone will use the billions that are about to pour into its cash register. The figure is such, analysts underline, that the group is able to do all three things: gratify shareholders in cash, reduce debt and invest in acquisitions, expansion and new projects. However, investors have very different opinions and in the coming weeks the debate will focus on the optimal distribution of the proceeds from the sale.
According to Citi analysts Vodafone could distribute 40 billion dollars to shareholders, pay taxes, reduce debt, and still have 38 billion to invest. The deal has such dimensions that it will still have a positive impact on the British economy: Vodafone's shareholding is in fact so widespread that it is expected to be a 'windfall' for British fund managers, small shareholders and pension funds.
Some shareholders would like to receive 60-70% of the proceeds from the sale. Analysts recall instead that the investment in Verizon Wireless has been highly profitable for Vodafone, which now must find another way to collect cash and pay rich dividends to shareholders in the long term. After leaving the United States, the group, according to some, cannot focus too much on old Europe, mature markets where economies in crisis and exaggerated competition have led to a slowdown. According to others, however, the time has come to invest in acquisitions and improvements to the network to strengthen Vodafone's position in countries such as Italy, Germany and Spain.
In Germany, the group has to digest the 7,7 billion euro acquisition of Kabel Deutschland, the largest cable operator, while in France it is building a 1 billion euro fiber optic network together with the French group Orange. In Spain, Vodafone may be interested in the cable operator Ono or the broadband provider Jazztel, while in Italy there are rumors of a possible acquisition of Fastweb, owned by Swisscom, for a figure of around 3 billion euros.
The future, however, lies in the emerging markets, as the managing director Vittorio Colao has said several times. The group has already hinted that it wants to strengthen its position in growing markets where it already has a significant presence, such as Africa, India and Turkey, but it may also want to enter new markets such as Latin America, Brazil in particular. Finally, there are those who argue that Vodafone has no intention of leaving the US: having sold the stake in Verizon Wireless, the group would now aim at T-Mobile, the US division of Deutsche Telekom.
