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As expected, Verizon and Vodafone came to terms Monday on what is one of the biggest transactions ever in any industry.
Verizon will buy Vodafone’s 45 percent stake in Verizon Wireless for $130 billion. It’s a deal that’s been talked about for years, but it was just last week when it was widely reported that discussions were getting serious.
After years of talks, we received an offer that was good value for shareholders. It was a good move for both partners and we were able to find the right price, said Vodafone CEO Vittorio Colao, Vo according to The New York Times.
With a still-recovering European economy, Vodafone now has some serious cash to boost its efforts against competition on a regional level. First up will be spending about $10 billion on high-speed wireless and broadband services over the next few years, the carrier said. Regulators in Europe have been pushing telecommunications companies to invest in their businesses and become more competitive with counterparts in North America and Asia.
Verizon and other U.S. carriers have started to see the wireless market become saturated with cellphones, causing a slowdown since just about everyone seems to have one. To get a return on its investment, analysts predict that Verizon will create new, reasonably priced bundles of its wireline and wireless products but the biggest opportunity, of course, will be having access to what used to be Vodafone’s share of VzW’s profit.
The blockbuster deal must still get regulatory approval, but the hurdles are expected to be small since Verizon was already the majority owner of Verizon Wireless and the impact on its 100 million customers will be negligible.
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