Vodafone to net £25bn by selling US stake to Verizon

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The Independent Online

Vodafone's US partner, Verizon, is to present new proposals to buy out the company's minority stake in Verizon Wireless that could net the UK telecoms giant more than £25bn.

Verizon promised to step up its efforts to acquire Vodafone's 45 per cent holding, after the $67bn (£38bn) acquisition of BellSouth by its rival AT&T.

That deal, announced over the weekend, unites the ownership of the biggest mobile phone company in the US, Cingular. Verizon Wireless trails Cingular by 51 million subscribers to 54 million.

Verizon and AT&T have been leading consolidation in the US telecoms markets, and investors predicted that Verizon would react without delay. Verizon responded to the deal yesterday by saying its focus remained on work to acquire Vodafone's stake, work it described as a "priority".

Vodafone shares rose 3 per cent to 125p amid speculation that Verizon would finally persuade the company to sell. Analysts at Morgan Stanley said the stake was worth £20.5m, although some estimates put it as high as £30m.

Vodafone continues to insist its Verizon Wireless stake is not for sale and Verizon's new overtures would be rebuffed. But last week's decision by Arun Sarin, Vodafone's chief executive, to sell the company's underperforming Japanese business suggests a new, ambivalent attitude towards overseas assets, analysts say.

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 has made no secret of its desire to take full control but talks between the two sides have been complicated because Vodafone faces a huge tax bill if it sells. Any deal could involve another jointly owned asset, Vodafone Italy, where Verizon is the minority partner.

The AT&T-BellSouth deal redraws the US telecoms landscape and pieces back together part of the monopoly that was broken up in 1984 into seven regional "Baby Bells". The emergence of mobile telephony and, now, voice-over-internet calls has dramatically increased competition in the intervening decades.

AT&T said yesterday that it planned 10,000 job cuts to help save up to $2bn a year from group costs. The cuts come on top of the 26,000 job cuts AT&T has already announced.

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