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Vodafone, the European communications giant, says talks with Verizon are back on discussions that could culminate in the sale of its 45 percent stake in Verizon Wireless to Verizon.
Talks, which have reportedly slowed down over the past few months, have now become more serious, "people familiar with the matter," told the Wall Street Journal. Those same sources said Verizon might pay well in excess of $100 billion to buy Vodafone’s stake and become the sole owner of Verizon Wireless. Price has been an issue, the financial newspaper said, with Verizon up to this point only wanting to pay $100 billion, and Vodafone wanting approximately $130 billion.
Verizon has said publicly on a number of occasions this year that it’s interested in the purchase, but hasn’t given many specifics about how it would work. And while the cash flow from a sale would be nice for Vodafone, the carrier has likely been hesitant to sell what’s arguably its greatest asset, a move that would make it more vulnerable to a European economy that’s been slower to recover that America’s has.
The market value of Verizon Wireless is estimated at $133 billion.
The revived discussions … indicate an increasing focus on the European market. Both the U.S. and European telecommunication markets stand to face some tough competition with the increasing move towards converged triple-play offers," noted Ronald Klingebiel, assistant professor of strategy at Warwick Business School. "To weather these impending storms, Vodafone is right to sell the stake so it can concentrate on its priority markets in Europe."
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