Verizon abandons hopes of buying out Vodafone's US stake

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The Independent Online

Investors lobbying Vodafone's chief executive, Arun Sarin, to raise up to $50bn (£27bn) through a sale of its stake in the US mobile company Verizon Wireless have been dealt a blow after Verizon shelved plans to bid for the stake.

Verizon's chief executive, Ivan Seidenberg, crushed hopes for a deal and said the issue was off the table for "the next several years". Earlier this year, Verizon had described the on-off talks as a "priority", and the company has made little secret that it would like fully to control the mobile business, the second largest in the US.

Some Vodafone shareholders, led by Standard Life, have publicly called for Mr Sarin to sell the stake and return the cash to shareholders. Standard Life, which has a 1.7 per cent stake in Vodafone, declined to comment on Verizon's comments yesterday. Vodafone shares closed 1.7 per cent lower at 114.25p.

Speaking at Vodafone's annual general meeting last week, Mr Sarin said: "Verizon Wireless is the market leader on almost all measures. We remain happy with the prospects for the business and our stake. If, however, we received a compelling offer for the stake, we would consider it." Mr Sarin argued that it would be unwise to sell the stake while it is accreting in value.

Mr Seidenberg said Mr Sarin's position was no more co-operative in private. "Arun communicated to us that Vodafone was extremely pleased with its position in the partnership," he said. "Their view is that the creation [of] value over the next few years is far greater than any strategy to exit the partnership. He reiterated that is exactly the position of Sir John Bond, his new chairman."

Mr Seidenberg said talks with Mr Sarin in New York last week concluded that a deal was impossible at this stage and the pair agreed to tell their shareholders to stop speculating on the issue. The pair had talked instead about plans to invest in Verizon Wireless, including the purchase of additional wireless spectrum where necessary.

In a separate announcement, Vodafone named Steve Pusey, currently president of European operations at Nortel, as its new chief technology officer.

Vodafone first bought into the US with the acquisition of AirTouch in 1999 and emerged with its 45 per cent stake in Verizon Wireless in a three-way merger later that year. Verizon said yesterday that Verizon Wireless's revenue in the three months to 30 June rose 18 per cent to $9.3bn. Churn, or customer cancellations, fell to a record-low 1.13 per cent.

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